CREDIT AGREEMENT
among
FREMONT GENERAL CORPORATION,
VARIOUS LENDING INSTITUTIONS,
and
THE CHASE MANHATTAN BANK,
as Agent
-----------------------------
Dated as of August 1, 1997
-----------------------------
$400,000,000
TABLE OF CONTENTS
PAGE
SECTION 1. Amount and Terms of Credit.....................................-1-
1.01 Commitments....................................................-1-
1.02 Minimum Amount of Each Borrowing; Maximum Number
of Borrowings..................................................-2-
1.03 Notice of Borrowing of Loans...................................-2-
1.04 Competitive Bid Borrowings.....................................-2-
1.05 Disbursement of Funds..........................................-5-
1.06 Notes; Register................................................-5-
1.07 Conversions....................................................-6-
1.08 Pro Rata Borrowings............................................-7-
1.09 Interest.......................................................-7-
1.10 Interest Periods...............................................-8-
1.11 Increased Costs, Illegality, etc...............................-9-
1.12 Compensation..................................................-11-
1.13 Change of Lending Office......................................-11-
SECTION 2. Fees; Commitments.............................................-12-
2.01 Fees..........................................................-12-
2.02 Voluntary Reduction of Commitments............................-12-
2.03 Mandatory Reduction of Commitments............................-12-
SECTION 3. Payments......................................................-12-
3.01 Voluntary Prepayments.........................................-12-
3.02 Mandatory Prepayments and Repayments..........................-13-
3.03 Method and Place of Payment...................................-14-
3.04 Net Payments..................................................-14-
SECTION 4. Conditions Precedent..........................................-15-
4.01 Effectiveness; Notes..........................................-15-
4.02 No Default; Representations and Warranties....................-15-
4.03 Officer's Certificate.........................................-16-
4.04 Opinions of Counsel...........................................-16-
4.05 Corporate Proceedings.........................................-16-
4.06 Consummation of the Transaction...............................-16-
4.07 Adverse Change, etc...........................................-17-
4.08 Litigation....................................................-18-
4.09 Pledge Agreement..............................................-18-
4.10 Financial Statements..........................................-18-
4.11 Approvals.....................................................-19-
4.12 Payment of Fees...............................................-19-
4.13 Consent Letter................................................-19-
4.14 Notice of Borrowing...........................................-19-
SECTION 5. Representations, Warranties and Agreements....................-20-
5.01 Corporate Status..............................................-20-
5.02 Corporate Power and Authority.................................-20-
5.03 No Violation..................................................-20-
5.04 Litigation....................................................-21-
5.05 Use of Proceeds...............................................-21-
5.06 Governmental Approvals........................................-21-
5.07 Investment Company Act........................................-22-
5.08 Public Utility Holding Company Act............................-22-
5.09 True and Complete Disclosure..................................-22-
5.10 Financial Condition; Financial Statements.....................-22-
5.11 Security Interests............................................-24-
5.12 Tax Returns and Payments......................................-24-
5.13 Compliance with ERISA.........................................-24-
5.14 Subsidiaries..................................................-25-
5.15 Intellectual Property.........................................-25-
5.16 Pollution and Other Regulations...............................-26-
5.17 Properties....................................................-26-
5.18 Labor Relations; Collective Bargaining Agreements.............-26-
5.19 Capitalization................................................-26-
5.20 Indebtedness..................................................-27-
5.21 Compliance with Statutes, etc.................................-27-
5.22 Transaction...................................................-27-
5.23 Special Purpose Corporation...................................-27-
SECTION 6. Affirmative Covenants.........................................-28-
6.01 Information Covenants.........................................-28-
6.02 Books, Records and Inspections................................-33-
6.03 Insurance.....................................................-33-
6.04 Payment of Taxes..............................................-33-
6.05 Corporate Franchises..........................................-33-
6.06 Compliance with Statutes, etc.................................-34-
6.07 ERISA.........................................................-34-
6.08 Performance of Obligations....................................-35-
6.09 Good Repair...................................................-35-
6.10 End of Fiscal Years; Fiscal Quarters..........................-35-
6.11 NAIC Tests....................................................-35-
SECTION 7. Negative Covenants............................................-35-
7.01 Changes in Business...........................................-35-
7.02 Consolidation, Merger, Sale or Purchase of Assets, etc........-36-
7.03 Liens.........................................................-37-
7.04 Indebtedness..................................................-40-
7.05 Investments...................................................-42-
7.06 Prepayments and Modifications of Permitted Subordinated
Debt and Liquid Yield Option Notes............................-43-
7.07 Restrictions on Subsidiary Payments...........................-43-
7.08 Transactions with Affiliates..................................-44-
7.09 Issuance of Stock.............................................-44-
7.10 Liabilities to Policyholder Surplus Ratio.....................-44-
7.11 Net Premiums Written Ratio....................................-44-
7.12 Leverage Ratio................................................-44-
7.13 Minimum Consolidated Net Worth................................-44-
7.14 Interest Coverage Ratio.......................................-44-
7.15 FIC Combined Surplus..........................................-45-
7.16 Insured Depository Subsidiaries...............................-45-
SECTION 8. Events of Default.............................................-45-
8.01 Payments......................................................-45-
8.02 Representations, etc..........................................-45-
8.03 Covenants.....................................................-45-
8.04 Default Under Other Agreements................................-45-
8.05 Bankruptcy, etc...............................................-46-
8.06 ERISA.........................................................-47-
8.07 Pledge Agreement..............................................-47-
8.08 Judgments.....................................................-47-
8.09 Ownership.....................................................-47-
SECTION 9. Definitions...................................................-48-
SECTION 10. The Agent.....................................................-66-
10.01 Appointment..................................................-66-
10.02 Delegation of Duties.........................................-66-
10.03 Exculpatory Provisions.......................................-67-
10.04 Reliance by Agent............................................-67-
10.05 Notice of Default............................................-68-
10.06 Non-Reliance on Agent and Other Banks........................-68-
10.07 Indemnification..............................................-68-
10.08 Agent in Its Individual Capacity.............................-69-
10.09 Resignation of the Agent; Successor Agent....................-69-
SECTION 11. Miscellaneous................................................-69-
11.01 Payment of Expenses, etc.....................................-69-
11.02 Right of Setoff..............................................-70-
11.03 Notices......................................................-70-
11.04 Benefit of Agreement.........................................-71-
11.05 No Waiver; Remedies Cumulative...............................-72-
11.06 Payments Pro Rata............................................-72-
11.07 Calculations; Computations...................................-73-
11.08 Governing Law; Submission to Jurisdiction; Venue.............-73-
11.09 Counterparts.................................................-74-
11.10 Effectiveness................................................-74-
11.11 Amendment or Waiver..........................................-74-
11.12 Survival.....................................................-75-
11.13 Domicile of Loans............................................-75-
11.14 Confidentiality..............................................-75-
11.15 WAIVER OF JURY TRIAL.........................................-76-
11.16 Headings Descriptive.........................................-76-
ANNEX I -- List of Banks and Commitments
ANNEX II -- Bank Addresses
ANNEX III -- Subsidiaries
ANNEX IV -- Collective Bargaining Agreements
ANNEX V -- Existing Indebtedness
ANNEX VI -- Existing Liens
EXHIBIT A-1 -- Form of Notice of Borrowing
EXHIBIT A-2 -- Form of Notice of Competitive Bid
Borrowing
EXHIBIT B -- Form of Note
EXHIBIT C-1 -- Form of Opinion of Wilson, Sonsini,
Xxxxxxxx & Xxxxxx
EXHIBIT C-2 -- Form of Opinion of Xxxx X. Xxxxxx, Esq.
EXHIBIT C-3 -- Form of Opinion of White & Case
EXHIBIT D -- Form of Officer's Certificate
EXHIBIT E -- Form of Second Amended and Restated Pledge Agreement
EXHIBIT F -- Form of Assignment and Assumption Agreement
EXHIBIT G -- Form of CT Corporation Consent Letter
CREDIT AGREEMENT, dated as of August 1, 1997, among FREMONT
GENERAL CORPORATION, a Nevada corporation (the "Borrower"), the lending
institutions listed from time to time on Annex I hereto (each a "Bank" and,
collectively, the "Banks"), and THE CHASE MANHATTAN BANK, as Agent (the
"Agent"). Unless otherwise defined herein, all capitalized terms used herein and
defined in Section 9 are used herein as so defined.
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Banks are willing to make available to the Borrower the credit
facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. AMOUNT AND TERMS OF CREDIT
1.01 COMMITMENTS. (a) Subject to and upon the terms and
conditions herein set forth, each Bank severally agrees to make a loan or loans
(each a "Loan" and, collectively, the "Loans") to the Borrower, which Loans (i)
shall be made at any time and from time to time on and after the Effective Date
and prior to the Final Maturity Date, (ii) may, at the option of the Borrower,
be incurred and maintained as, and/or converted into, Base Rate Loans or
Eurodollar Loans, PROVIDED that all Loans made by all Banks pursuant to the same
Borrowing shall, unless otherwise specifically provided herein, consist entirely
of Loans of the same Type, (iii) may be repaid and reborrowed in accordance with
the provisions hereof, (iv) shall not exceed for any Bank at any time
outstanding that aggregate principal amount which equals the Commitment of such
Bank at such time and (v) shall not exceed in the aggregate for all Banks at any
time outstanding that aggregate principal amount which, when added to the then
aggregate outstanding principal amount of all Competitive Bid Loans, equals the
Total Commitment at such time.
(b) Subject to and upon the terms and conditions herein set
forth, each Bank severally agrees that the Borrower may incur a loan or loans
(each a "Competitive Bid Loan" and collectively, the "Competitive Bid Loans")
pursuant to a Competitive Bid Borrowing at any time and from time to time on and
after the Effective Date and prior to the date which is the third Business Day
preceding the date which is 14 days prior to the Final Maturity Date, PROVIDED
that after giving effect to any Competitive Bid Borrowing and the use of the
proceeds thereof, the aggregate outstanding principal amount of Competitive Bid
Loans, when combined with the then aggregate outstanding principal amount of all
Loans, shall not exceed the Total Commitment at such time.
1.02 MINIMUM AMOUNT OF EACH BORROWING; MAXIMUM NUMBER OF
BORROWINGS. The aggregate principal amount of each Borrowing hereunder shall not
be less than (i) $5,000,000, in the case of Loans, and (ii) $25,000,000, in the
case of Competitive Bid Loans, and, if in excess thereof, shall be in an
integral multiple of $1,000,000. More than one Borrowing may be incurred on any
day; PROVIDED that at no time shall there be outstanding more than six
Borrowings of Eurodollar Loans.
1.03 NOTICE OF BORROWING OF LOANS. (a) Whenever the Borrower
desires to incur Loans hereunder, it shall give the Agent at its Notice Office,
(x) in the case of a Borrowing of Eurodollar Loans, written notice (or
telephonic notice promptly confirmed in writing) of such proposed Borrowing
which notice must be given prior to 12:00 Noon (New York time) at least three
Business Days prior to the date of such proposed Borrowing and (y) in the case
of a Borrowing of Base Rate Loans, written notice (or telephonic notice promptly
confirmed in writing) of such proposed Borrowing, which notice must be given
prior to 11:00 A.M. (New York time) at least one Business Day prior to the date
of such proposed Borrowing. Each such notice (each, a "Notice of Borrowing"),
except as otherwise expressly provided in Section 1.11, shall be irrevocable,
and, in the case of a written notice or a confirmation of telephonic notice,
shall be in the form of Exhibit A-1 hereto, appropriately completed to specify
(i) the aggregate principal amount of the Loans to be made pursuant to such
Borrowing, (ii) the date of such Borrowing (which shall be a Business Day) and
(iii) whether the respective Borrowing shall consist of Base Rate Loans or
Eurodollar Loans and, if Eurodollar Loans, the Interest Period to be initially
applicable thereto. The Agent shall promptly give each Bank written notice (or
telephonic notice promptly confirmed in writing) of each proposed Borrowing, of
such Bank's proportionate share thereof and of the other matters covered by the
Notice of Borrowing.
(b) Without in any way limiting the obligation of the Borrower to
confirm in writing any notice it may give hereunder by telephone, the Agent may
act prior to receipt of written confirmation without liability upon the basis of
such telephonic notice, believed by the Agent in good faith to be from an
Authorized Officer of the Borrower. In each such case the Borrower hereby waives
the right to dispute the Agent's record of the terms of any such telephonic
notice.
1.04 COMPETITIVE BID BORROWINGS. (a) Whenever the Borrower
desires to incur a Competitive Bid Borrowing, it shall deliver to the Agent,
prior to 12:00 Noon (New York time) (x) at least five Business Days prior to the
date of such proposed Competitive Bid Borrowing, in the case of a Spread
Borrowing, and (y) at least two Business Days prior to the date of such proposed
Competitive Bid Borrowing, in the case of an Absolute Rate Borrowing, a written
notice substantially in the form of Exhibit A-2 hereto (a "Notice of Competitive
Bid Borrowing"), which notice shall specify in each case (i) the date (which
shall be a Business Day) and the aggregate amount of the proposed Competitive
Bid Borrowing, (ii) the maturity date for repayment of each and every
Competitive Bid Loan to be made as part of such Competitive Bid Borrowing (which
maturity date may be (A) one, two, three or six
2
months after the date of such Competitive Bid Borrowing, in the case of a Spread
Borrowing, and (B) between 14 and 364 days, inclusive, after the date of such
Competitive Bid Borrowing, in the case of an Absolute Rate Borrowing, PROVIDED
that in no event shall the maturity date of any Competitive Bid Borrowing be
later than the third Business Day preceding the Final Maturity Date), (iii) the
interest payment date or dates relating thereto, (iv) whether the proposed
Competitive Bid Borrowing is to be an Absolute Rate Borrowing or a Spread
Borrowing, and if a Spread Borrowing, the Interest Rate Basis, and (v) any other
terms to be applicable to such Competitive Bid Borrowing. The Agent shall
promptly notify each Bidder Bank by telephone or facsimile of each such request
for a Competitive Bid Borrowing received by it from the Borrower and of the
contents of the related Notice of Competitive Bid Borrowing.
(b) Each Bidder Bank shall, if, in its sole discretion, it elects
to do so, irrevocably offer to make one or more Competitive Bid Loans to the
Borrower as part of such proposed Competitive Bid Borrowing at a rate or rates
of interest specified by such Bidder Bank in its sole discretion and determined
by such Bidder Bank independently of each other Bidder Bank, by notifying the
Agent (which shall give prompt notice thereof to the Borrower) before 10:00 A.M.
(New York time) on the date (the "Reply Date") which is (x) in the case of an
Absolute Rate Borrowing, one Business Day before the date of such proposed
Competitive Bid Borrowing and (y) in the case of a Spread Borrowing, four
Business Days before the date of such proposed Competitive Bid Borrowing, of the
minimum amount and maximum amount of each Competitive Bid Loan which such Bidder
Bank would be willing to make as part of such proposed Competitive Bid Borrowing
(which amounts may, subject to the proviso to the first sentence of Section
1.01(b), exceed such Bidder Bank's Commitment), the rate or rates of interest
therefor and such Bidder Bank's lending office with respect to such Competitive
Bid Loan; PROVIDED that if the Agent in its capacity as a Bidder Bank shall, in
its sole discretion, elect to make any such offer, it shall notify the Borrower
of such offer before 9:45 A.M. (New York time) on the Reply Date. If any Bidder
Bank shall elect not to make such an offer, such Bidder Bank shall so notify the
Agent, before 10:00 A.M. (New York time) on the Reply Date, and such Bidder Bank
shall not be obligated to, and shall not, make any Competitive Bid Loan as part
of such Competitive Bid Borrowing; PROVIDED that the failure by any Bidder Bank
to give such notice shall not cause such Bidder Bank to be obligated to make any
Competitive Bid Loan as part of such proposed Competitive Bid Borrowing.
(c) The Borrower shall, in turn, (x) before 12:00 Noon (New York
time) on the Reply Date in the case of a proposed Absolute Rate Borrowing and
(y) before 12:00 Noon (New York time) on the Business Day following the Reply
Date in the case of a proposed Spread Borrowing, either:
(i) cancel such Competitive Bid Borrowing by giving the Agent
notice to such effect (it being understood and agreed that if the
Borrower gives no such notice of cancellation and no notice of
acceptance pursuant to clause (ii)
3
below, then the Borrower shall be deemed to have cancelled such
Competitive Bid Borrowing), or
(ii) accept one or more of the offers made by any Bidder Bank or
Bidder Banks pursuant to clause (b) above by giving notice (in writing
or by telephone confirmed in writing) to the Agent of the amount of each
Competitive Bid Loan (which amount shall be equal to or greater than the
minimum amount, and equal to or less than the maximum amount, notified
to the Borrower by the Agent on behalf of such Bidder Bank for such
Competitive Bid Borrowing pursuant to clause (b) above) to be made by
each Bidder Bank as part of such Competitive Bid Borrowing, and reject
any remaining offers made by Bidder Banks pursuant to clause (b) above
by giving the Agent notice to that effect; PROVIDED that the acceptance
of offers may only be made on the basis of ascending Absolute Rates (in
the case of an Absolute Rate Borrowing) or Spreads (in the case of a
Spread Borrowing), in each case commencing with the lowest rate so
offered; PROVIDED FURTHER, however, if offers are made by two or more
Bidder Banks at the same rate and acceptance of all such equal offers
would result in a greater principal amount of Competitive Bid Loans
being accepted than the aggregate principal amount requested by the
Borrower, if the Borrower elects to accept any of such offers the
Borrower shall accept such offers PRO RATA from such Bidder Banks (on
the basis of the maximum amounts of such offers) unless any such Bidder
Bank's PRO RATA share would be less than the minimum amount specified by
such Bidder Bank in its offer, in which case the Borrower shall have the
right to accept one or more such equal offers in their entirety and
reject the other equal offer or offers or to allocate acceptance among
all such equal offers (but giving effect to the minimum and maximum
amounts specified for each such offer pursuant to clause (b) above), as
the Borrower may elect in its sole discretion.
(d) If the Borrower notifies the Agent that such Competitive Bid
Borrowing is cancelled, or if such Competitive Bid Borrowing is deemed
cancelled, pursuant to clause (c)(i) above, the Agent shall give prompt notice
thereof to the Bidder Banks and such Competitive Bid Borrowing shall not be
made.
(e) If the Borrower accepts one or more of the offers made by any
Bidder Bank or Bidder Banks pursuant to clause (c)(ii) above, the Agent shall in
turn promptly notify (x) each Bidder Bank that has made an offer as described in
clause (b) above, of the date and aggregate amount of such Competitive Bid
Borrowing and whether or not any offer or offers made by such Bidder Bank
pursuant to clause (b) above have been accepted by the Borrower and (y) each
Bidder Bank that is to make a Competitive Bid Loan as part of such Competitive
Bid Borrowing, of the amount of each Competitive Bid Loan to be made by such
Bidder Bank as part of such Competitive Bid Borrowing.
4
1.05 DISBURSEMENT OF FUNDS. (a) Subject to the terms and
conditions herein set forth, no later than 11:00 A.M. (New York time) on the
date of each incurrence of Loans or Competitive Bid Loans (1:00 P.M. (New York
time) on such date in the case of a Borrowing of Base Rate Loans or a
Competitive Bid Borrowing constituting an Absolute Rate Borrowing), each Bank
will make available its PRO RATA share, if any, of each Borrowing requested to
be made on such date in the manner provided below.
(b) Each Bank shall make available all amounts it is to fund
under any Borrowing in U.S. dollars and immediately available funds to the Agent
at the Agent's Payment Office and the Agent will make available to the Borrower
by depositing to its account at the Agent's Payment Office the aggregate of the
amounts so made available in the type of funds received. Unless the Agent shall
have been notified by any Bank prior to the date of any such Borrowing that such
Bank does not intend to make available to the Agent its portion of the Borrowing
or Borrowings to be made on such date, the Agent may assume that such Bank has
made such amount available to the Agent on such date of Borrowing, and the
Agent, in reliance upon such assumption, may (in its sole discretion and without
any obligation to do so) make available to the Borrower a corresponding amount.
If such corresponding amount is not in fact made available to the Agent by such
Bank and the Agent has made available same to the Borrower, the Agent shall be
entitled to recover such corresponding amount from such Bank. If such Bank does
not pay such corresponding amount forthwith upon the Agent's demand therefor,
the Agent shall promptly notify the Borrower, and the Borrower shall immediately
pay such corresponding amount to the Agent. The Agent shall also be entitled to
recover from such Bank or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Agent to the Borrower to the date such
corresponding amount is recovered by the Agent, at a rate per annum equal to (x)
if paid by such Bank, the overnight Federal Funds Effective Rate or (y) if paid
by the Borrower, the then applicable rate of interest, calculated in accordance
with Section 1.09, for the respective Loans or Competitive Bid Loans.
(c) Nothing in this Section 1.05 shall be deemed to relieve any
Bank from its obligation to fulfill its commitments hereunder or to prejudice
any rights which the Borrower may have against any Bank as a result of any
default by such Bank hereunder.
1.06 NOTES; REGISTER. (a) The Borrower's obligation to pay the
principal of, and interest on, the Loans made to it by each Bank shall be
evidenced by a promissory note substantially in the form of Exhibit B hereto
with blanks appropriately completed in conformity herewith (each a "Note" and
collectively the "Notes").
(b) The Note issued to each Bank shall (i) be executed by the
Borrower, (ii) be payable to the order of such Bank and be dated the Effective
Date, (iii) be in a
5
stated principal amount equal to the Commitment of such Bank and be payable in
the principal amount of the Loans evidenced thereby, (iv) mature on the Final
Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.09 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby, (vi) be subject to mandatory repayment as provided in
Section 3.02 and (vii) be entitled to the benefits of this Agreement and the
other Credit Documents.
(c) Each Bank will record on its internal records the amount of
each Loan and Competitive Bid Loan made by it and each payment in respect
thereof and will prior to any transfer of its Note endorse on the reverse side
thereof the outstanding principal amount of Loans and Competitive Bid Loans
evidenced thereby. Failure to make any such notation or any error in any such
notation shall not affect the Borrower's obligations in respect of such Loans
and Competitive Bid Loans.
(d) The Agent shall maintain at its Payment Office a register for
the recordation of the names and addresses of the Banks, the Commitments of the
Banks from time to time, and the principal amount of the Loans and Competitive
Bid Loans owing to each Bank from time to time together with the maturity and
interest rates applicable to each such Competitive Bid Loan, and other terms
applicable thereto (the "Register"). The entries in the Register shall
constitute PRIMA FACIE evidence as to the information set forth therein.
1.07 CONVERSIONS. The Borrower shall have the option to convert
on any Business Day all or a portion at least equal to $5,000,000 (and, if in
excess thereof, an integral multiple of $1,000,000) of the outstanding principal
amount of the Loans of one Type owing by the Borrower into a Borrowing or
Borrowings of the other Type; PROVIDED that (i) except as otherwise provided in
Section 1.11(b), Eurodollar Loans may be converted into Base Rate Loans only on
the last day of an Interest Period applicable thereto, and no partial conversion
of a Borrowing of Eurodollar Loans shall reduce the outstanding principal amount
of the Eurodollar Loans pursuant to such Borrowing to less than $5,000,000, (ii)
Base Rate Loans may only be converted into Eurodollar Loans if no Default or
Event of Default is in existence on the date of the conversion, (iii) Borrowings
of Eurodollar Loans resulting from this Section 1.07 shall be limited in number
as provided in Section 1.02 and (iv) each such conversion shall be made PRO RATA
among the Loans of each Bank of the Type being converted. Each such conversion
shall be effected by the Borrower by giving the Agent at its Notice Office,
prior to 12:00 Noon (New York time), at least three Business Days' (or one
Business Day's in the case of a conversion into Base Rate Loans) prior written
notice (or telephonic notice promptly confirmed in writing) (each a "Notice of
Conversion") specifying the Loans to be so converted, the Type of Loans to be
converted into and, if to be converted into a Borrowing of Eurodollar Loans, the
Interest Period to be initially applicable thereto. The Agent shall give each
Bank prompt notice of any such proposed conversion.
6
1.08 PRO RATA BORROWINGS. All Borrowings of Loans under this
Agreement shall be loaned by the Banks PRO RATA on the basis of their respective
Commitments. It is understood that no Bank shall be responsible for any default
by any other Bank in its obligation to make Loans or Competitive Bid Loans
hereunder and that each Bank shall be obligated to make the Loans and
Competitive Bid Loans provided to be made by it hereunder, regardless of the
failure of any other Bank to fulfill its commitments hereunder.
1.09 INTEREST. (a) The unpaid principal amount of each Base Rate
Loan shall bear interest from the date of the incurrence thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Base Rate in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall
bear interest from the date of the incurrence thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Applicable Eurodollar Margin plus the relevant Eurodollar Rate.
(c) The unpaid principal amount of each Competitive Bid Loan
shall bear interest from the date the proceeds thereof are made available to the
Borrower until maturity (whether by acceleration or otherwise) at the rate or
rates per annum specified by a Bidder Bank or Bidder Banks, as the case may be,
pursuant to Section 1.04(b) and accepted by the Borrower pursuant to Section
1.04(c).
(d) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and Competitive Bid Loan shall bear
interest at a rate per annum equal to the Base Rate in effect from time to time
plus 2%; PROVIDED that principal in respect of Eurodollar Loans and Competitive
Bid Loans shall bear interest after the same becomes due (whether by
acceleration or otherwise) until the end of the applicable Interest Period for
such Eurodollar Loans, or the original scheduled maturity of such Competitive
Bid Loans, as the case may be, at a per annum rate equal to 2% plus the rate of
interest applicable on the due date therefor.
(e) Interest shall accrue from and including the date of any
incurrence of a Loan or a Competitive Bid Loan to and excluding the date of any
repayment thereof and shall be payable (i) in respect of each Base Rate Loan,
quarterly in arrears on the last Business Day of each calendar quarter, (ii) in
respect of each Competitive Bid Loan, at such times as specified in the Notice
of Competitive Bid Borrowing relating thereto, (iii) in respect of each
Eurodollar Loan, on the last day of each Interest Period applicable thereto and,
in the case of an Interest Period in excess of three months, on each date
occurring at three month intervals after the first day of such Interest Period
and (iv) in respect of each Loan or Competitive Bid Loan, on any conversion or
prepayment (on the amount so converted or prepaid), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
7
(f) All computations of interest hereunder shall be made in
accordance with Section 11.07(b).
(g) The Agent, upon determining the interest rate for any
Borrowing of Eurodollar Loans for any Interest Period, shall promptly notify the
Borrower and the Banks thereof.
1.10 INTEREST PERIODS. At the time the Borrower gives a Notice of
Borrowing or Notice of Conversion, in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto), or prior to 12:00 Noon (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Agent written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period to be applicable to such Borrowing, which Interest Period shall,
at the option of the Borrower, be a one, two, three or six month period.
Notwithstanding anything to the contrary contained above:
(i) the initial Interest Period for any Borrowing of Eurodollar
Loans shall commence on the date of such Borrowing (including the date
of any conversion from a Borrowing of Base Rate Loans) and each Interest
Period occurring thereafter in respect of such Borrowing shall commence
on the day on which the next preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day
of such calendar month;
(iii) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, PROVIDED that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of
the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) no Interest Period may be elected if it would extend beyond
the Final Maturity Date; and
(v) no Interest Period may be elected at any time when a Default or
Event of Default is then in existence.
If upon the expiration of any Interest Period, the Borrower has failed, or is
not permitted, to elect a new Interest Period to be applicable to any Borrowing
of Eurodollar Loans as provided above, the Borrower shall be deemed to have
elected to convert such Borrowing into a Borrowing of Base Rate Loans effective
as of the expiration date of such current Interest Period.
8
1.11 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that (1)
in the case of clause (i) below, the Agent or (2) in the case of clauses (ii)
and (iii) below, any Bank shall have determined (which determination shall,
absent manifest error, be final and conclusive and binding upon all parties
hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period or in respect of any Spread Borrowing priced by
reference to the Eurodollar Rate that, by reason of any changes arising
after the date of this Agreement affecting the interbank Eurodollar
market, adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the definition of
Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect
to any Eurodollar Loans or Competitive Bid Loans because of (x) any
change since the date of this Agreement (or, in the case of any such
cost or reduction with respect to any Competitive Bid Loan, since the
making of such Competitive Bid Loan) in any applicable law, governmental
rule, regulation, guideline, order or request (whether or not having the
force of law) or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule,
regulation, guideline, order or request (such as, for example, but not
limited to, a change in official reserve requirements, but, in all
events, excluding reserves required under Regulation D to the extent
included in the computation of the Eurodollar Rate) and/or (y) other
circumstances affecting the interbank Eurodollar market or the position
of such Bank in such market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan or Competitive Bid Loan has become unlawful by compliance by such
Bank in good faith with any law, governmental rule, regulation,
guideline or order (or would conflict with any such governmental rule,
regulation, guideline or order not having the force of law but with
which such Bank customarily complies even though the failure to comply
therewith would not be unlawful), or has become impracticable as a
result of a contingency occurring after the Effective Date which
materially and adversely affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Agent in the case of clause (i)
above to the extent applicable to Loans) shall on such date give notice (if by
telephone promptly confirmed in writing) to the Borrower and to the Agent of
such determination (which notice the Agent shall promptly transmit to each of
the other Banks). Thereafter (x) in the case of clause (i) above, Eurodollar
Loans (or Competitive Bid Loans constituting a Spread Borrowing priced by
reference to the Eurodollar Rate) shall no longer be available until such time
as the Agent notifies the Borrower and the Banks that the circumstances giving
rise to such notice by the Agent no longer exist, and any Notice of Borrowing,
Notice of Competitive Bid Borrowing or Notice of Conversion given by the
Borrower with respect to Eurodollar Loans (or any affected Competitive Bid
Loans)
9
which have not yet been incurred shall be deemed rescinded by the Borrower, (y)
in the case of clause (ii) above, the Borrower shall pay to such Bank, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Bank in its sole discretion shall determine) as shall be required to compensate
such Bank for such increased costs or reductions in amounts receivable hereunder
(a written notice as to the additional amounts owed to such Bank, showing in
reasonable detail the basis for the calculation thereof, including such Bank's
method of allocating such costs among its affected customers, submitted to the
Borrower by such Bank shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) and (z) in the case of clause (iii) above, the
Borrower shall take one of the actions specified in Section 1.11(b) as promptly
as possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.11(a)(ii) or any Eurodollar Loan or
Competitive Bid Loan is affected by the circumstances described in Section
1.11(a)(iii), the Borrower may (and in the case of a Eurodollar Loan or
Competitive Bid Loan affected pursuant to Section 1.11(a)(iii) shall) either (x)
if the affected Eurodollar Loan or Competitive Bid Loan is then being made
pursuant to a Borrowing, cancel said Borrowing by giving the Agent telephonic
notice (promptly confirmed in writing) thereof on the same date that the
Borrower was notified by a Bank pursuant to Section 1.11(a)(ii) or (iii), (y) if
the affected Eurodollar Loan is then outstanding, upon at least three Business
Days' notice to the Agent, require the affected Bank to convert each such
Eurodollar Loan into a Base Rate Loan or (z) subject to the provisions of
Section 3.02(c), if the affected Competitive Bid Loan is then outstanding,
prepay such Competitive Bid Loan in full (which prepayment may be made with the
proceeds of a Loan); PROVIDED, that if more than one Bank is affected at any
time, then all affected Banks must be treated the same pursuant to this Section
1.11(b).
(c) If any Bank shall have determined that the adoption after the
Effective Date of any applicable law, rule or regulation regarding capital
adequacy, or any change therein after the Effective Date, or any change after
the Effective Date in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Bank or its
parent with any request or directive made after the Effective Date regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Bank's or its parent's capital or assets as a consequence
of its commitments or obligations hereunder to a level below that which such
Bank or its parent could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's or its parent's policies with
respect to capital adequacy), then from time to time, within 30 days after
demand by such Bank (with a copy to the Agent), the Borrower shall pay to such
Bank or its parent such additional amount or amounts as will compensate such
Bank or its parent for such reduction. Each Bank, upon determining in good faith
that any additional amounts will
10
be payable pursuant to this Section 1.11(c), will give prompt written notice
thereof to the Borrower, which notice shall set forth in reasonable detail the
basis of the calculation of such additional amounts, including such Bank's
method of allocating such costs among its affected customers, although the
failure to give any such notice shall not release or diminish any of the
Borrower's obligations to pay additional amounts pursuant to this Section
1.11(c) upon receipt of such notice.
1.12 COMPENSATION. The Borrower shall compensate each Bank, upon
its written request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Bank to
fund its Eurodollar Loans or Competitive Bid Loans but excluding any loss of
anticipated profit with respect to such Loans or Competitive Bid Loans) which
such Bank may sustain: (i) if for any reason (other than a default by such Bank
or the Agent) a Borrowing of Eurodollar Loans or of Competitive Bid Loans
accepted by the Borrower in accordance with Section 1.04(c)(ii), does not occur
on a date specified therefor in a Notice of Borrowing, Notice of Competitive Bid
Borrowing or Notice of Conversion (whether or not withdrawn by the Borrower or
deemed withdrawn pursuant to Section 1.11(a)); (ii) if any repayment, prepayment
or conversion of any of its Eurodollar Loans or any repayment of Competitive Bid
Loans occurs on a date which is not the last day of an Interest Period
applicable thereto; (iii) if any prepayment of any of its Eurodollar Loans or
Competitive Bid Loans is not made on any date specified in a notice of
prepayment given by the Borrower; or (iv) as a consequence of (x) any other
default by the Borrower to repay its Eurodollar Loans or Competitive Bid Loans
when required by the terms of this Agreement or (y) an election made pursuant to
Section 1.11(b). Calculation of all amounts payable to a Bank under this Section
1.12 in respect of Eurodollar Loans or Competitive Bid Loans priced by reference
to the Eurodollar Rate shall be made as though that Bank had actually funded its
relevant Loan or Competitive Bid Loan through the purchase of a Eurodollar
deposit bearing interest at the Eurodollar Rate in an amount equal to the amount
of that Loan or Competitive Bid Loan, having a maturity comparable to the
relevant Interest Period and through the transfer of such Eurodollar deposit
from an offshore office of that Bank or other bank to a domestic office of that
Bank in the United States of America; PROVIDED, HOWEVER, that each Bank may fund
each of its Eurodollar Loans or Competitive Bid Loans in any manner it sees fit
and the foregoing assumption shall be utilized only for the calculation of
amounts payable under this Section 1.12.
1.13 CHANGE OF LENDING OFFICE. Each Bank agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.11(a)(ii) or
(iii) or 3.04 with respect to such Bank, it will, if requested by the Borrower,
use reasonable efforts (subject to overall policy considerations of such Bank)
to designate another lending office for any Loans or Competitive Bid Loans
affected by such event; PROVIDED, that such designation is made on such terms
that, in the opinion of such Bank, such Bank and its lending office suffer no
economic, legal or regulatory
11
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section. Nothing in this Section 1.13 shall
affect or postpone any of the obligations of the Borrower or the right of any
Bank provided in Section 1.11 or 3.04.
SECTION 2. FEES; COMMITMENTS
2.10 FEES. (a) The Borrower agrees to pay to the Agent a facility
fee (the "Facility Fee") for the account of the Banks PRO RATA on the basis of
their respective Commitments for the period from and including the Effective
Date to and excluding the date the Total Commitment has been terminated,
computed at a rate per annum equal to the Applicable Facility Fee Percentage
from time to time of the Total Commitment as in effect from time to time.
Accrued Facility Fees shall be due and payable in arrears on the last Business
Day of each March, June, September and December, and on the date upon which the
Total Commitment is terminated.
(b) In addition to any fees set forth herein, the Borrower shall
pay to the Agent, for the account of the Agent, when and as due, such fees as
have been, or are from time to time, separately agreed upon.
(c) All computations of Fees shall be made in accordance with
Section 11.07(b).
2.02 VOLUNTARY REDUCTION OF COMMITMENTS. Upon at least three
Business Days' prior written notice (or telephonic notice promptly confirmed in
writing) given by the Borrower to the Agent at its Notice Office (which notice
shall be irrevocable and shall be promptly transmitted by the Agent to each of
the Banks), the Borrower shall have the right, without premium or penalty, to
terminate, in whole or in part, the Total Unutilized Commitment (or to the
extent that at such time there are no Loans outstanding, to terminate the Total
Commitment), PROVIDED, that (x) any partial reduction of the Total Unutilized
Commitment pursuant to this Section 2.02 shall be in the amount of at least
$10,000,000 (and, if greater, in an integral multiple of $1,000,000), and (y)
any such termination shall apply to proportionately and permanently reduce the
Commitment of each of the Banks.
2.03 MANDATORY REDUCTION OF COMMITMENTS. The Total Commitment
shall terminate on the Final Maturity Date.
SECTION 3. PAYMENTS
3.01 VOLUNTARY PREPAYMENTS. The Borrower shall have the right to
prepay Loans, without premium or penalty, in whole or in part, from time to time
on the following terms and conditions: (i) the Borrower shall give the Agent at
its Notice Office written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay the Loans, the amount of such prepayment and
(in the case of Eurodollar
12
Loans) the specific Borrowing(s) pursuant to which made, which notice shall be
given by the Borrower no later than 12:00 Noon (New York time) two Business Days
prior to the date of such prepayment, and which notice shall promptly be
transmitted by the Agent to each of the Banks; (ii) each partial prepayment of
any Borrowing shall be in an aggregate principal amount of at least $5,000,000
(and, if greater, in an integral multiple of $1,000,000), PROVIDED that no
partial prepayment of Eurodollar Loans made pursuant to a Borrowing shall reduce
the aggregate principal amount of the Loans outstanding pursuant to such
Borrowing to an amount less than $5,000,000; (iii) prepayments of Eurodollar
Loans made pursuant to this Section 3.01 may only be made on the last day of an
Interest Period applicable thereto; and (iv) each prepayment in respect of any
Loans made pursuant to a Borrowing shall be applied PRO RATA among such Loans.
Upon receipt of a notice of prepayment pursuant to this Section 3.01, the Agent
shall promptly notify each Bank of the contents thereof and of such Bank's
ratable share of such prepayment. The Borrower shall have no right under this
Section 3.01 to prepay any principal amount of any Competitive Bid Loans.
3.02 MANDATORY PREPAYMENTS AND REPAYMENTS. (a) If on any date the
sum of the outstanding principal amount of Loans and Competitive Bid Loans (all
the foregoing, collectively, the "Aggregate Loan Outstandings") exceeds the
Total Commitment as then in effect, the Borrower shall prepay on such date the
principal of Loans, in an amount equal to such excess. If, after giving effect
to the prepayment of all outstanding Loans as set forth above, the remaining
Aggregate Loan Outstandings exceed the Total Commitment, the Borrower shall
repay on such date the principal of Competitive Bid Loans in an aggregate amount
equal to such excess, PROVIDED that no Competitive Bid Loan shall be prepaid
pursuant to this sentence unless the Bank that made same consents to such
prepayment. In the absence of such consent, the provisions of Section 3.02(c)
shall be applicable.
(b) With respect to each prepayment or repayment of Loans
required by this Section 3.02, the Borrower may designate the Types of Loans
which are to be prepaid and the specific Borrowing(s) pursuant to which made;
PROVIDED, that (i) if any prepayment of Eurodollar Loans made pursuant to a
single Borrowing shall reduce the outstanding Loans made pursuant to such
Borrowing to an amount less than $5,000,000, such Borrowing shall be immediately
converted into Base Rate Loans; and (ii) each prepayment of any Loans made
pursuant to a Borrowing shall be applied PRO RATA among such Loans. In the
absence of a designation of Loans by the Borrower as described in this Section
3.02(b), the Agent shall, subject to the above, make such designation in its
sole discretion with a view, but no obligation, to minimize breakage costs owing
under Section 1.12.
(c) At any time that the Borrower is obligated to prepay any
Competitive Bid Loan pursuant to Section 1.11(b) or 3.02(a) on a date other than
the scheduled maturity date thereof, such prepayment shall only be made if the
respective Bank that made such Competitive Bid Loan has consented in writing (or
by telephone confirmed in writing) to the Borrower to such prepayment within 48
hours after notice (in writing
13
or by telephone confirmed in writing) by the Borrower to such Bank of such
prepayment (it being understood that the Borrower will give such notice and that
any failure to respond to such notice will constitute a rejection thereof); if
such prepayment is not so consented to by the respective Bank then, in the case
of a prepayment otherwise required pursuant to Section 3.02(a), the provisions
of the immediately succeeding sentence will be applicable. At the time any such
Competitive Bid Loans are otherwise required to be prepaid the Borrower will
deposit 100% of the principal amount that otherwise would have been paid in
respect of the Competitive Bid Loans with the Agent to be held as security for
the obligations of the Borrower hereunder pursuant to a cash collateral
agreement to be entered into in form and substance satisfactory to the Agent,
with such cash collateral to be released from such cash collateral account (and
applied to repay the principal amount of such Competitive Bid Loans) upon each
occurrence thereafter of the last day of an Interest Period applicable to the
relevant Competitive Bid Loans, with the amount to be so released and applied on
the last day of each Interest Period to be the amount of the Competitive Bid
Loans to which such Interest Period applies (or, if less, the amount remaining
in such cash collateral account).
3.03 METHOD AND PLACE OF PAYMENT. Except as otherwise
specifically provided herein, all payments under this Agreement and the Notes
shall be made to the Agent for the ratable account of the Banks entitled
thereto, not later than 12:00 Noon (New York time) on the date when due and
shall be made in immediately available funds and in lawful money of the United
States of America at the Agent's Payment Office, it being understood that
written, telex or facsimile notice by the Borrower to the Agent to make a
payment from the funds in the Borrower's account at the Agent's Payment Office
shall constitute the making of such payment to the extent of such funds held in
such account. Any payments under this Agreement which are made later than 12:00
Noon (New York time) shall be deemed to have been made on the next succeeding
Business Day. Whenever any payment to be made hereunder shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect
immediately prior to such extension.
3.04 NET PAYMENTS. All payments made by the Borrower hereunder
will be made without setoff or counterclaim. Promptly upon notice from any Bank
to the Borrower, the Borrower will pay, prior to the date on which penalties
attach thereto, all present and future income, stamp and other taxes, levies,
costs and charges whatsoever imposed, assessed, levied or collected on or in
respect of a Loan or a Competitive Bid Loan solely as a result of the interest
rate being determined by reference to the Eurodollar Rate and/or the provisions
of this Agreement relating to the Eurodollar Rate and/or the recording,
registration, notarization or other formalization of any thereof and/or any
payments of principal, interest or other amounts made on or in respect of a Loan
or a Competitive Bid Loan when the interest rate is determined by reference to
the Eurodollar Rate (all such taxes, levies, costs and charges being herein
14
collectively called "Taxes"); PROVIDED that Taxes shall not include taxes
imposed on or measured by the overall net income or overall net profits of that
Bank by the United States of America or any political subdivision or taxing
authority thereof or therein, or taxes on or measured by the overall net income
or overall net profits of any foreign branch or subsidiary of that Bank by any
foreign country or subdivision thereof in which that branch or subsidiary is
doing business. The Borrower shall also pay such additional amounts equal to
increases in taxes payable by that Bank described in the foregoing proviso which
increases are attributable to payments made by the Borrower described in the
immediately preceding sentence of this Section 3.04. Promptly after the date on
which payment of any such Tax is due pursuant to applicable law, the Borrower
will, at the request of that Bank, furnish to that Bank evidence, in form and
substance satisfactory to that Bank, that the Borrower has met its obligation
under this Section 3.04. The Borrower will indemnify each Bank against, and
reimburse each Bank on demand for, any Taxes, as determined by that Bank in its
good faith discretion. Such Bank shall provide the Borrower with appropriate
receipts for any payments or reimbursements made by the Borrower pursuant to
this Section 3.04. Notwithstanding the foregoing, the Borrower shall be
entitled, to the extent it is required to do so by law, to deduct or withhold
(and shall not be required to make payments as otherwise required in this
Section 3.04 on account of such deductions or withholdings) income or other
similar taxes imposed by the United States of America from interest, fees or
other amounts payable hereunder for the account of any Bank other than a Bank
(i) who is a U.S. Person for Federal income tax purposes or (ii) who has the
Prescribed Forms on file with the Borrower for the applicable year to the extent
deduction or withholding of such taxes is not required as a result of the filing
of such Prescribed Forms, PROVIDED that if the Borrower shall so deduct or
withhold any such taxes, it shall provide a statement to the Agent and such
Bank, setting forth the amount of such taxes so deducted or withheld, the
applicable rate and any other information or documentation which such Bank may
reasonably request for assisting such Bank to obtain any allowable credits or
deductions for the taxes so deducted or withheld in the jurisdiction or
jurisdictions in which such Bank is subject to tax.
SECTION 4. CONDITIONS PRECEDENT. The obligation of the Banks to
make any Loan or Competitive Bid Loan to the Borrower hereunder is subject, at
the time of the making of such Loan or Competitive Bid Loan (except as otherwise
hereinafter indicated), to the satisfaction of the following conditions:
4.01 EFFECTIVENESS; NOTES. On or prior to the Initial Borrowing
Date, (i) the Effective Date shall have occurred as provided in Section 11.10
and (ii) there shall have been delivered to the Agent for the account of each
Bank the appropriate Note executed by the Borrower, and in the amount, maturity
and as otherwise provided herein.
4.02 NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of
the making of such Loan or Competitive Bid Loan and also after giving effect
thereto, (i) there shall exist no Default or Event of Default and (ii) all of
the representations and
15
warranties contained herein or in the other Credit Documents shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and as of such date, unless
stated to relate to a specific earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of such
earlier date.
4.03 OFFICER'S CERTIFICATE. On the Initial Borrowing Date, the
Agent shall have received a certificate dated such date, signed by an
appropriate officer of the Borrower, stating that all of the applicable
conditions set forth in Section 4.02, 4.06, 4.07, 4.08 and 4.11 exist or have
been satisfied as of such date.
4.04 OPINIONS OF COUNSEL. On the Initial Borrowing Date, the
Agent shall have received an opinion, or opinions, in form and substance
reasonably satisfactory to the Agent, addressed to each of the Banks and dated
the Initial Borrowing Date, from (i) Wilson, Sonsini, Xxxxxxxx & Xxxxxx, special
counsel to the Borrower, which opinion shall be substantially in the form of
Exhibit C-1 hereto, (ii) Xxxx X. Xxxxxx, Associate General Counsel of the
Borrower, which opinion shall be substantially in the form of Exhibit C-2 hereto
and (iii) White & Case, special counsel to the Banks, which opinion shall be
substantially in the form of Exhibit C-3 hereto.
4.05 CORPORATE PROCEEDINGS. (a) On the Initial Borrowing Date,
the Banks shall have received a certificate, dated the Initial Borrowing Date,
signed by the President, any Executive Vice President or any Senior Vice
President of the Borrower, and attested to by the Secretary or any Assistant
Secretary of the Borrower, in the form of Exhibit D hereto with appropriate
insertions, together with copies of the Certificate of Incorporation and By-Laws
of each of the Borrower and FCIG, the resolutions of the Borrower and the other
documents referred to in such certificate, and the foregoing shall be reasonably
satisfactory to the Agent.
(b) On the Initial Borrowing Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Transaction Documents
shall be reasonably satisfactory in form and substance to the Agent, and the
Agent shall have received all information and copies of all certificates,
documents and papers, including records of corporate proceedings and
governmental approvals, if any, which the Agent reasonably may have requested in
connection therewith, such documents and papers where appropriate to be
certified by proper corporate or governmental authorities.
4.06 CONSUMMATION OF THE TRANSACTION. (a) On the Initial
Borrowing Date, the Acquisition shall have been consummated in accordance with
the Acquisition Documents and all applicable laws, and each of the conditions
precedent to the consummation of the Acquisition to be satisfied by the Seller
shall have been satisfied and not waived except with the consent of the Agent
and the Required Banks.
16
(b) (i) On the Initial Borrowing Date, the total commitments
under the Existing Credit Agreements shall have been terminated, and all loans
and notes issued thereunder shall have been repaid in full, together with
interest thereon, and all other amounts (including premiums) owing thereunder
shall have been repaid in full and the Existing Credit Agreements shall have
been terminated and be of no further force or effect. The Borrower shall be
entitled to utilize this Agreement to terminate the commitments and repay the
loans under the Existing Credit Agreements.
(ii) On the Initial Borrowing Date, the creditors under the
Existing Credit Agreements shall have terminated and released all security
interests in and Liens on the assets owned by the Borrower and Industrial and/or
their respective Subsidiaries. The Agent shall have received such releases of
security interests in and Liens on the assets owned by the Borrower or
Industrial and/or their respective Subsidiaries as may have been requested by
the Agent, which releases shall be in form and substance reasonably satisfactory
to the Agent. Without limiting the foregoing, there shall have been delivered to
the Agent (i) proper termination statements (Form UCC-3 or the appropriate
equivalent) for filing under the UCC of each jurisdiction where a financing
statement (Form UCC-1 or the appropriate equivalent) was filed with respect to
the Borrower or Industrial and/or their respective Subsidiaries in connection
with the security interests created with respect to the Existing Credit
Agreements and the documentation related thereto, (ii) termination or
reassignment of any security interest in, or Lien on, any patents, trademarks,
copyrights, or similar interests of the Borrower or Industrial and/or their
respective Subsidiaries on which filings have been made, (iii) terminations of
all mortgages, leasehold mortgages, deeds of trust and leasehold deeds of trust
created with respect to property of the Borrower or Industrial and/or their
respective Subsidiaries, in each case, to secure the obligations in respect of
the Existing Credit Agreements, all of which shall be in form and substance
reasonably satisfactory to the Agent, and (iv) all collateral owned by the
Borrower or Industrial and/or their respective Subsidiaries in the possession of
any of the creditors in respect of the Existing Credit Agreements or any
collateral agent or trustee under any related security document shall have been
returned to the Borrower or Industrial and/or their respective Subsidiaries.
(c) On or prior to the Initial Borrowing Date, there shall have
been delivered to the Agent and the Banks true and correct copies of all
Transaction Documents entered into in connection with the Transaction
(including, without limitation, the Acquisition Documents), and all of the terms
and conditions of such Transaction Documents, as well as the structure of the
Acquisition, shall be in form and substance satisfactory to the Agent and the
Required Banks.
4.07 ADVERSE CHANGE, ETC. On or prior to the Initial Borrowing
Date, since December 31, 1996, nothing shall have occurred which the Agent or
the Required Banks shall determine (i) has, or could reasonably be expected to
have, a material adverse effect on the rights or remedies of the Agent or the
Banks, or on the ability of the Borrower to perform its obligations to them
hereunder or under any other Credit
17
Document, (ii) has, or could reasonably be expected to have, a material adverse
effect on the corporate, organizational or legal structure of the Borrower or
its Subsidiaries or (iii) has, or could reasonably be expected to have, a
materially adverse effect on the condition (financial or otherwise, determined
pursuant to GAAP or SAP), businesses, operations, properties, assets,
liabilities, investments or prospects of the Borrower and its Subsidiaries taken
as a whole, it being understood that, changes in the market value of securities
held in the Borrower's investment portfolio alone shall not constitute a
material adverse effect of the type described in clause (iii) above.
4.08 LITIGATION. On the Initial Borrowing Date, there shall be no
actions, suits or proceedings pending or threatened with respect to the Borrower
or any of its Subsidiaries which in the judgment of the Agent or the Required
Banks could reasonably be expected to (i) have a material adverse effect on the
condition (financial or otherwise, determined pursuant to GAAP or SAP),
businesses, operations, properties, assets, liabilities, investments or
prospects of the Borrower and its Subsidiaries taken as a whole or (ii) have a
material adverse effect on the rights or remedies of the Banks hereunder or
under any other Credit Document or on the ability of the Borrower to perform its
obligations to the Banks hereunder or under any other Credit Document.
4.09 PLEDGE AGREEMENT. On or prior to the Initial Borrowing Date,
the Borrower shall have duly authorized, executed and delivered the Pledge
Agreement in the form of Exhibit E hereto (the "Pledge Agreement") and shall
have delivered to the Collateral Agent, as pledgee thereunder, all of the
Pledged Stock referred to therein, together with undated stock powers executed
in blank.
4.10 FINANCIAL STATEMENTS. Prior to the Initial Borrowing Date,
the Borrower shall have delivered or caused to be delivered to the Agent and to
each Bank:
(i) the audited consolidated and unaudited consolidating
balance sheet of the Borrower as of December 31, 1996, and the related
consolidated and consolidating statements of income and of stockholders'
equity and consolidated statements of cash flows for the fiscal year
then ended, in each case prepared in accordance with GAAP;
(ii) the audited balance sheet of FFC as of December 31,
1996, and the related statements of income, of stockholders' equity and
of cash flows for the fiscal year then ended, in each case prepared in
accordance with GAAP;
(iii) the audited balance sheet of each Material Insurance
Subsidiary as of December 31, 1996, and the related statements of
income, of stockholders' equity and of cash flows for the fiscal year
then ended, in each case prepared in accordance with SAP and as filed
with the Applicable Insurance Regulatory Authority;
18
(iv) the audited consolidated balance sheet of FIL and its
Subsidiaries as of December 31, 1996, and the related statements of
income, of stockholders' equity and of cash flows for the fiscal year
then ended, in each case prepared in accordance with GAAP; and
(v) the unaudited consolidated balance sheet of the Borrower
as of March 31, 1997, and the related consolidated statements of income,
of stockholders' equity and of cash flows for the quarter then ended, in
each case prepared in accordance with GAAP (subject to normal year-end
audit adjustments).
4.11 APPROVALS. On the Initial Borrowing Date, all necessary and
material governmental and third party approvals and filings in connection with
the Credit Documents and otherwise referred to herein including the approval of
the California Department of Insurance, to the extent such approvals and filings
are required to be obtained or made prior to the Initial Borrowing Date, shall
have been obtained and remain in full force and effect, and all applicable
waiting periods shall have expired without any action being taken by any
competent authority which restrains, prevents or imposes, in the judgment of the
Required Banks or the Agent, materially adverse conditions upon the consummation
of the transactions contemplated thereby.
4.12 PAYMENT OF FEES. On the Initial Borrowing Date, all costs,
fees and expenses, and all other compensation contemplated by this Agreement or
the other Credit Documents, due to the Agent or any Banks shall have been paid
to the extent due.
4.13 CONSENT LETTER. On the Initial Borrowing Date, the Agent
shall have received a letter from CT Corporation System, substantially in the
form of Exhibit G hereto, indicating its consent to its appointment by the
Borrower as its agent to receive service of process as specified in Section
11.08.
4.14 NOTICE OF BORROWING. The Agent shall have received a Notice
of Borrowing satisfying the requirements of Section 1.03 in the case of a
Borrowing of Loans, or a Notice of Competitive Bid Borrowing satisfying the
requirements of Section 1.04 in the case of a Borrowing of Competitive Bid
Loans.
The acceptance of the benefits of each Loan and Competitive Bid Loan shall
constitute a representation and warranty by the Borrower to each of the Banks
that all of the applicable conditions specified above exist or have been
satisfied as of such date. All of the certificates, legal opinions and other
documents and papers referred to in this Section 4, unless otherwise specified,
shall be delivered to the Agent at its Notice Office for the account of each of
the Banks and, except for the Notes and the Pledged Stock and related stock
transfers, in sufficient counterparts for each of the Banks and shall be
reasonably satisfactory in form and substance to the Agent.
19
SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order
to induce the Banks to enter into this Agreement and to make the Loans and
Competitive Bid Loans provided for herein, the Borrower makes the following
representations and warranties to, and agreements with, the Banks, all of which
shall survive the execution and delivery of this Agreement and the making of the
Loans and Competitive Bid Loans (with the making of each Loan and Competitive
Bid Loan being deemed to constitute a representation and warranty that the
matters specified in this Section 5 are true and correct in all material
respects on and as of the date of the making of each such Loan or Competitive
Bid Loan, as the case may be, unless such representation and warranty expressly
indicates that it is being made as of any specific date in which case such
representation and warranty shall be true and correct in all material respects
as of such specified date, it being understood that all representations and
warranties with respect to the Acquisition Documents shall be made only as of
the Initial Borrowing Date):
5.01 CORPORATE STATUS. The Borrower and each of its Subsidiaries
(i) is a duly organized and validly existing corporation in good standing under
the laws of the jurisdiction of its organization and has the corporate or other
organizational power and authority to own its property and assets and to
transact the business in which it is engaged and presently proposes to engage
and (ii) has duly qualified and is authorized to do business and is in good
standing in all jurisdictions where it is required to be so qualified and where
the failure to be so qualified would have a material adverse effect on the
condition (financial or otherwise, determined pursuant to GAAP or SAP),
businesses, operations, properties, assets, liabilities or investments of the
Borrower and its Subsidiaries taken as a whole.
5.02 CORPORATE POWER AND AUTHORITY. The Borrower has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of each of the Transaction Documents to which it is a party and has
taken all necessary corporate action to authorize the execution, delivery and
performance of its obligations under each of the Transaction Documents. The
Borrower has duly executed and delivered each such Transaction Document and each
such Transaction Document constitutes the legal, valid and binding obligation of
the Borrower, enforceable in accordance with its terms.
5.03 NO VIOLATION. Neither the execution, delivery and
performance by the Borrower of the Transaction Documents to which it is a party,
nor compliance with the terms and provisions thereof, nor the consummation of
the transactions contemplated therein (i) will contravene any applicable
provision of any law, statute, rule, regulation, order, writ, injunction or
decree of any court or governmental instrumentality, (ii) will conflict or be
inconsistent with or result in any breach of any of the terms, covenants,
conditions or provisions of, or constitute a default under, or (other than
pursuant to the Pledge Agreement) result in the creation or imposition of (or
the obligation to create or impose) any Lien upon any of the property or assets
of the Borrower or any of its Subsidiaries pursuant to the terms of, any
indenture, mortgage,
20
deed of trust, loan agreement or other material instrument to which the Borrower
or any of its Subsidiaries is a party or by which it or any of its property or
assets are bound or to which it may be subject or (iii) will violate any
provision of the charter or By-Laws of the Borrower or any of its Subsidiaries.
5.04 LITIGATION. There are no actions, suits or proceedings
pending or, to the Borrower's knowledge, threatened, with respect to the
Borrower or any of its Subsidiaries (i) that are reasonably likely to have a
material adverse effect on the condition (financial or otherwise, determined
pursuant to GAAP or SAP), businesses, operations, properties, assets,
liabilities or investments of the Borrower and its Subsidiaries taken as a whole
or (ii) that could reasonably be expected to have a material adverse effect on
the rights or remedies of the Banks or the Agent or on the ability of the
Borrower to perform its obligations to them hereunder and under the other Credit
Documents.
5.05 USE OF PROCEEDS. (a) Subject to Section 5.05(b) and (c), all
proceeds of the Loans and Competitive Bid Loans shall be utilized to (i) effect
the Transaction, (ii) to pay fees and expenses related to the Transaction, and
(iii) for general corporate purposes of the Borrower and its Subsidiaries.
(b) Neither the making of any Loan or Competitive Bid Loan
hereunder, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System. At the time of the making of each Loan or Competitive
Bid Loan, not more than 25% of the value of the assets subject to the provisions
of Section 7 of the Borrower, or of the Borrower and its Subsidiaries on a
consolidated basis, shall constitute Margin Stock.
(c) Notwithstanding the foregoing provisions of this Section
5.05, no proceeds of any Loan or any Competitive Bid Loan will be utilized to
purchase any capital stock or other ownership interests of a Person in a
transaction, or as part of a series of transactions, the result of which is the
ownership by the Borrower and/or its Subsidiaries of 5% or more of the capital
stock or other ownership interests of such Person unless the Board of Directors
(or similar body if such Person is not a corporation) of such Person has
approved such transaction prior to any public announcement of the purchase, or
the intent to purchase, any such capital stock or ownership interests.
5.06 GOVERNMENTAL APPROVALS. No order, consent, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, any foreign or domestic governmental or public body or
authority, or any subdivision thereof, is required to authorize or is required
in connection with (i) the execution, delivery and performance of any
Transaction Document or (ii) the legality, validity, binding effect or
enforceability of any Transaction Document.
21
5.07 INVESTMENT COMPANY ACT. Neither the Borrower nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
5.08 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower nor
any of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
5.09 TRUE AND COMPLETE DISCLOSURE. All factual information (taken
as a whole) heretofore or contemporaneously furnished by or on behalf of the
Borrower or any of its Subsidiaries in writing to the Agent or any Bank
(including, without limitation, all such information contained in the
Transaction Documents) for purposes of or in connection with this Agreement, the
other Credit Documents or any transaction contemplated herein or therein is, and
all other such factual information (taken as a whole) hereafter furnished by or
on behalf of the Borrower in writing to the Agent or any Bank will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any material fact
necessary to make such information (taken as a whole) not misleading at such
time in light of the circumstances under which such information was provided.
There is no fact known to the Borrower which materially and adversely affects
the condition (financial or otherwise, determined pursuant to GAAP or SAP),
businesses, operations, assets, liabilities, properties or investments of the
Borrower and its Subsidiaries, taken as a whole, which has not been disclosed
herein or in such other documents, certificates and statements furnished to the
Banks for use in connection with the transactions contemplated hereby.
5.10 FINANCIAL CONDITION; FINANCIAL STATEMENTS. (a) On and as of
the Initial Borrowing Date and after giving effect to the Transaction and to all
Indebtedness (including each Loan and Competitive Bid Loan) incurred, and to be
incurred, and Liens created and to be created, in connection therewith, (x) the
sum of the assets, at a fair valuation, of the Borrower will exceed its debts,
(y) the Borrower will not have incurred nor intended to, or believe that it
will, incur debts beyond its ability to pay such debts as such debts mature and
(z) the Borrower will have sufficient capital with which to conduct its
business. For purposes of this Section 5.10(a), "debt" means any liability on a
claim, and "claim" means (i) right to payment whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (ii)
right to an equitable remedy for breach of performance if such breach gives rise
to a payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
(b) The financial statements delivered to the Banks pursuant to
Sections 4.10 and 5.10(d) present fairly the financial position of the Persons
specified
22
therein, at the dates of said statements and the results of operations for the
periods covered thereby. All such financial statements have been prepared in
accordance with SAP or GAAP, as indicated in Sections 4.10 and 5.10(d),
consistently applied except to the extent provided in the notes to said
financial statements.
(c) Except as fully disclosed in the financial statements
delivered pursuant to Sections 4.10 and 5.10(d), there are no liabilities or
obligations with respect to the Borrower or any of its Subsidiaries of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in aggregate, would be
material to the Borrower or to the Borrower and its Subsidiaries taken as a
whole. The Borrower does not know of any basis for the assertion against it of
any liability or obligation of any nature whatsoever that is not fully disclosed
in the financial statements delivered pursuant to Sections 4.10 and 5.10(d)
which, either individually or in the aggregate, could reasonably be expected to
be material to the Borrower or the Borrower and its Subsidiaries taken as a
whole.
(d) The balance sheets of Industrial for the fiscal year and
three month period ended on December 31, 1996 and March 31, 1997, respectively,
and the related statements of income, cash flows and shareholders' equity of
Industrial for the fiscal year or three month period, as the case may be, ended
on such dates, copies of which have been furnished to the Banks prior to the
Initial Borrowing Date, present fairly in all material respects the financial
position of Industrial at the dates of such balance sheets and the results of
the operations of Industrial for the periods covered thereby. All of the
foregoing financial statements have been prepared in accordance with GAAP
consistently applied. The PRO FORMA consolidated balance sheet of the Borrower
and its Subsidiaries as of the Initial Borrowing Date and after giving effect to
the Transaction and the financing therefor, a copy of which has been furnished
to the Banks prior to the Initial Borrowing Date, has been prepared in good
faith and is based on reasonable assumptions, and there are no statements or
conclusions in such balance sheet which are based upon or include information
known to the Borrower to be misleading in any material respect or which fail to
take into account material information known to the Borrower regarding the
matters reported therein. There has been no material adverse change in the
condition (financial or otherwise, determined pursuant to GAAP or SAP),
businesses, operations, properties, assets or liabilities of the Borrower or of
the Borrower and its Subsidiaries taken as a whole from that of the Borrower or
of the Borrower and its Subsidiaries taken as a whole as of December 31, 1996.
(e) On and as of the Initial Borrowing Date, the financial
projections (the "Projections") delivered to the Agent and the Banks prior to
the Initial Borrowing Date have been prepared in good faith and are based on
reasonable assumptions, and there are no statements or conclusions in the
Projections which are based upon or include information known to the Borrower to
be misleading in any material respect or which fail to take into account
material information known to the Borrower regarding the matters reported
therein. On the Initial Borrowing Date, the Borrower believes that
23
the Projections are reasonable and attainable, it being recognized by the Banks,
however, that projections as to future events are not to be viewed as facts and
that the actual results during the period or periods covered by the Projections
may differ from the projected results and that the differences may be material.
5.11 SECURITY INTERESTS. The Pledge Agreement creates, as
security for the Obligations, valid and enforceable perfected security interests
in and Liens on all of the Collateral, superior to and prior to the rights of
all third persons, and subject to no other Liens (except for Non-Consensual
Permitted Liens), in favor of the Collateral Agent for the benefit of the Banks.
The Borrower has good and marketable title to all Collateral free and clear of
all Liens (except as created pursuant to the Pledge Agreement and except for
Non-Consensual Permitted Liens). No filings, recordings or consents (except for
those that have been made) are required in order to perfect the security
interests created under the Pledge Agreement.
5.12 TAX RETURNS AND PAYMENTS. The Borrower and each of its
Subsidiaries has filed all federal income tax returns and all other tax returns,
domestic and foreign, required to be filed by it and has paid all material taxes
and assessments payable by it which have become due, other than those not yet
delinquent and except for those contested in good faith. The Borrower and each
of its Subsidiaries has paid, or has provided adequate reserves (in the good
faith judgment of the management of such Person) for the payment of, all
federal, state and foreign income taxes applicable for all prior fiscal years
and for the current fiscal year to the date hereof.
5.13 COMPLIANCE WITH ERISA. Each Plan is in substantial
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to a Plan; no Plan is insolvent or in reorganization; the aggregate
amount of Unfunded Current Liabilities in respect of all Plans does not exceed
$1,000,000; no Plan has an accumulated or waived funding deficiency, has
permitted decreases in its funding standard account or has applied for an
extension of any amortization period within the meaning of Section 412 of the
Code; neither the Borrower nor any Subsidiary nor any ERISA Affiliate has
incurred any material liability to or on account of a Plan pursuant to Section
409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or
Section 4971 or 4975 of the Code or has been notified that it will incur any
material liability under any of the foregoing Sections with respect to any Plan;
no proceedings have been instituted by the PBGC to terminate any Plan; no
condition exists which presents a material risk to the Borrower or any
Subsidiary or any ERISA Affiliate of incurring a material liability to or on
account of a Plan pursuant to the foregoing provisions of ERISA and the Code; no
material lien imposed under the Code or ERISA on the assets of the Borrower or
any Subsidiary or any ERISA Affiliate exists nor has the Borrower, any
Subsidiary or any ERISA Affiliate been notified that such a lien will be imposed
on the assets of the Borrower, any Subsidiary or any ERISA Affiliate on account
of any Plan; and the Borrower and its Subsidiaries do not maintain or contribute
to any employee welfare benefit plan (as defined in Section 3(1) of ERISA)
(other than such an employee welfare benefit plan which is a "multiemployer
plan"
24
within the meaning of Section 414(f) of the Code) which provides benefits to
retired employees (other than as required by Section 601 of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA) (other than
any such employee pension benefit plan which is intended to be qualified under
Section 401(a) of the Code), the obligations with respect to which employee
welfare benefit plans or employee pension benefit plans, individually or in the
aggregate, would have a material adverse effect upon the condition (financial or
otherwise, determined pursuant to GAAP or SAP), businesses, operations,
properties, assets, liabilities or investments of the Borrower and its
Subsidiaries taken as a whole. With respect to Plans that are multiemployer
plans (as defined in Section 3(37) of ERISA) the representations and warranties
in this Section 5.13, other than any made with respect to liability under
Section 4201 or 4204 of ERISA, are made to the best knowledge of the Borrower.
5.14 SUBSIDIARIES. (a) Annex III lists each Subsidiary of the
Borrower (and the direct and indirect ownership interest of the Borrower
therein) in each case existing on the Effective Date. As of the Effective Date,
all such Subsidiaries are Wholly-Owned Subsidiaries of the Borrower.
(b) There are no restrictions on the Borrower or any of its
Insurance Subsidiaries which prohibit or otherwise restrict (x) the ability of
any Insurance Subsidiary to (a) pay dividends or make other distributions or pay
any Indebtedness owed to the Borrower or any Insurance Subsidiary, (b) make
loans or advances to the Borrower or any Insurance Subsidiary, (c) transfer any
of its properties or assets to the Borrower or any Insurance Subsidiary or (d)
guarantee the Obligations or (y) the ability of the Borrower or any Insurance
Subsidiary of the Borrower to create, incur, assume or suffer to exist any Lien
upon its property or assets to secure the Obligations, other than prohibitions
or restrictions existing under or by reason of (i) this Agreement or the other
Transaction Documents, (ii) Legal Requirements, (iii) customary non-assignment
provisions entered into in the ordinary course of business and consistent with
past practices, (iv) purchase money obligations for property acquired in the
ordinary course of business, so long as such obligations are permitted under
this Agreement, (v) any restriction or encumbrance with respect to an Insurance
Subsidiary imposed pursuant to an agreement which has been entered into for the
sale or disposition of all or substantially all of the capital stock or assets
of such Insurance Subsidiary, so long as such sale or disposition is permitted
under this Agreement, and (vi) Liens permitted under Section 7.03 and any
documents or instruments governing the terms of any Indebtedness or other
obligations secured by any such Liens, PROVIDED, that such prohibitions or
restrictions apply only to the assets subject to such Liens.
5.15 INTELLECTUAL PROPERTY. The Borrower and each of its
Subsidiaries have obtained or are in the process of applying for all material
patents, trademarks, servicemarks, trade names, copyrights, licenses and other
rights, free from burdensome restrictions, that are necessary for the operation
of their respective businesses as presently conducted and as proposed to be
conducted.
25
5.16 POLLUTION AND OTHER REGULATIONS. The Borrower and each of
its Subsidiaries are in compliance with all laws and regulations relating to
pollution and environmental control, equal employment opportunity and employee
safety in all domestic and foreign jurisdictions in which the Borrower and each
of its Subsidiaries is presently doing business, and the Borrower will comply
and cause each of its Subsidiaries to comply with all such laws and regulations
which may be imposed in the future in jurisdictions in which the Borrower or
such Subsidiary may then be doing business; in each case other than those the
non-compliance with which would not have a material adverse effect on the
condition (financial or otherwise, determined pursuant to GAAP or SAP),
businesses, operations, properties, assets, liabilities or investments of the
Borrower and its Subsidiaries taken as a whole or on the ability of the Borrower
to perform its obligations under any Credit Document.
5.17 PROPERTIES. The Borrower and each of its Subsidiaries has
good and marketable title to all properties owned by them, free and clear of all
Liens, other than as permitted by Section 7.03.
5.18 LABOR RELATIONS; COLLECTIVE BARGAINING AGREEMENTS. (a) Set
forth on Annex IV is a list and description (including dates of termination) of
all collective bargaining or similar agreements between or applicable to the
Borrower or any of its Subsidiaries and any union, labor organization or other
bargaining agent in respect of the employees of the Borrower and/or any
Subsidiary on the Effective Date.
(b) Neither the Borrower nor any of its Subsidiaries is engaged
in any unfair labor practice that is reasonably likely to have a material
adverse effect on the Borrower or on the Borrower and its Subsidiaries taken as
a whole. There is (i) no significant unfair labor practice complaint pending
against the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, threatened against any of them, before the National Labor Relations
Board, and no significant grievance or significant arbitration proceeding
arising out of or under any collective bargaining agreement is now pending
against the Borrower or any of its Subsidiaries or, to the best knowledge of the
Borrower, threatened against any of them, (ii) no significant strike, labor
dispute, slowdown or stoppage is pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries and (iii) to the best knowledge of the
Borrower, no union representation question exists with respect to the employees
of the Borrower or any of its Subsidiaries, except (with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate) such as is not reasonably likely to have a material adverse effect on
the condition (financial or otherwise, determined pursuant to GAAP or SAP)
businesses, operations, properties, assets, liabilities or investments of the
Borrower and its Subsidiaries taken as a whole.
5.19 CAPITALIZATION. On the Effective Date, the authorized
capital stock of the Borrower consists of (i) 49,500,000 shares of common stock,
$1.00 par value, of which 32,649,265 were issued and outstanding as of June 30,
1997 and (ii)
26
2,000,000 shares of preferred stock, $0.01 par value, none of which are issued
and outstanding. As of the Effective Date, all such outstanding shares of the
Borrower have been duly and validly issued and are fully paid and nonassessable.
Except for the Liquid Yield Option Notes, neither the Borrower nor any of its
Subsidiaries has outstanding any securities convertible into or exchangeable for
its capital stock or outstanding any rights to subscribe for or to purchase, or
any options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock.
5.20 INDEBTEDNESS. Annex V sets forth a true and complete list of
all Indebtedness (including, without limitation, Contingent Obligations) of the
Borrower as of the Effective Date (other than Indebtedness having an aggregate
principal amount not to exceed $4,000,000), in each case showing the aggregate
principal amount thereof, the name of the lender in respect thereof and the name
of any other entity which has directly or indirectly guaranteed such
Indebtedness.
5.21 COMPLIANCE WITH STATUTES, ETC. The Borrower and each of its
Subsidiaries is in compliance in all material respects with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or foreign, in respect of the conduct of their
businesses and the ownership of their properties (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls).
5.22 TRANSACTION. At the time of consummation thereof, the
Transaction shall have been consummated in all material respects in accordance
with the terms of the respective Transaction Documents and all applicable laws.
At the time of consummation thereof, all consents and approvals of, and filings
and registrations with, and all other actions in respect of, all governmental
agencies, authorities or instrumentalities required in order to make or
consummate the Transaction shall have been obtained, given, filed or taken and
are or will be in full force and effect (or effective judicial relief with
respect thereto shall have been obtained) (other than immaterial consents
relating to the Acquisition). All applicable waiting periods with respect
thereto have or, prior to the time when required, will have, expired without, in
all such cases, any action being taken by any competent authority which
restrains, prevents, or imposes material adverse conditions upon the
Transaction. Additionally, there does not exist any judgment, order or
injunction prohibiting or imposing material adverse conditions upon the
Transaction, or the incurrence of any Loan or Competitive Bid Loan or the
performance by the Borrower of its obligations under the Transaction Documents
to which it is party. All actions taken by the Borrower pursuant to or in
furtherance of the Transaction have been taken in all material respects in
compliance with the respective Transaction Documents and all applicable laws.
5.23 SPECIAL PURPOSE CORPORATION. The TOPRS Subsidiary was formed
for the purpose of, and shall conduct no business other than: (i) issuing the
TOPRS, (ii) loaning the proceeds of the TOPRS to the Borrower, (iii) making
distributions to
27
the holders of the TOPRS solely from payments received from the Borrower
pursuant to the TOPRS Debt and (iv) any other actions necessary to implement the
foregoing.
SECTION 6. AFFIRMATIVE COVENANTS. The Borrower hereby covenants
and agrees that on the Effective Date and thereafter, for so long as this
Agreement is in effect and until such time as the Total Commitment has
terminated, no Notes are outstanding and the Loans and Competitive Bid Loans,
together with interest, Fees and all other Obligations incurred hereunder, are
paid in full:
6.01 INFORMATION COVENANTS. The Borrower will furnish to each
Bank (without exhibits, unless requested by such Bank):
(a) ANNUAL FINANCIAL STATEMENTS. (i) As soon as available and in
any event within 120 days after the close of each fiscal year of the
Borrower, (x) the consolidated and consolidating balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal year and the
related consolidated and consolidating statements of income and of
stockholders' equity and consolidated statement of cash flows for such
fiscal year, and (y) the balance sheet of each of the Borrower, FFC and
FCIG (on a stand alone basis in the case of the Borrower and on a
consolidated basis in the case of FFC and FCIG) as at the end of such
fiscal year and the related statements of income and of stockholders'
equity for such fiscal year, in each case prepared in accordance with
GAAP and setting forth comparative figures for the preceding fiscal
year, and, (1) in the case of such consolidated financial statements
furnished to each Bank with respect to the Borrower and FFC, examined by
independent certified public accountants of recognized national standing
whose opinion shall not be qualified as to the scope of audit or as to
the status of the Borrower, FFC or any of their respective Subsidiaries
as a going concern and (2) in the case of such financial statements
furnished to each Bank with respect to the Borrower on an unconsolidated
or consolidating basis and FCIG, accompanied by an opinion of the Chief
Financial Officer or other Authorized Officer of the Borrower stating
that such financial statements fairly present the financial condition
and results of operations of the Borrower or FCIG, as the case may be,
in accordance with GAAP.
(ii) As soon as available and in any event within 120 days after the
close of each fiscal year of the Borrower, the annual combined financial
statements of FIC and its Subsidiaries and the annual financial
statements of FIC and each Material Insurance Subsidiary on a stand
alone basis (in each case prepared in accordance with SAP) for such
fiscal year, as filed with the respective Applicable Insurance
Regulatory Authority and setting forth comparative figures for the
preceding fiscal year, together with an opinion of the Chief Financial
Officer or other Authorized Officer of the Borrower stating that such
financial statements fairly present the combined financial condition and
results of operations of FIC and each respective Subsidiary (including
each Material Insurance Subsidiary) in accordance with SAP.
28
(iii) As soon as available and in any event within 120 days after
the close of each fiscal year of the Borrower, (x) the consolidated and
consolidating balance sheet of Investors Bancor and its Subsidiaries as
at the end of such fiscal year and the related consolidated and
consolidating statements of income and of stockholders' equity for such
year, setting forth comparative figures for the preceding fiscal year,
together with an opinion of the Chief Financial Officer or other
Authorized Officer of the Borrower stating that, in the case of such
consolidated financial statements, such financial statements fairly
present the consolidated financial condition and results of operations
of Investors Bancor and each respective Subsidiary in accordance with
GAAP, (y) the balance sheet of FIL as at the end of such fiscal year and
the related statements of income, of stockholders' equity and of cash
flows for such fiscal year, setting forth comparative figures for the
preceding fiscal year, and examined by independent certified public
accountants of recognized national standing whose opinion shall not be
qualified as to scope of audit or as to the status of FIL as a going
concern and (z) to the extent not included in clause (y) above, the
balance sheet of each Subsidiary of Investors Bancor as at the end of
such fiscal year and the related statement of income, setting forth
comparative figures for the preceding fiscal year, together with an
opinion of the Chief Financial Officer or other Authorized Officer of
the Borrower stating that such balance sheet fairly presents the assets
and liabilities such Subsidiary in accordance with GAAP.
(iv) As soon as available and in any event within 120 days after
the close of each fiscal year of the Borrower, a written favorable
opinion, in form and substance satisfactory to the Agent, by either the
firm of independent certified public accountants providing the opinion
referred to in Section 6.01(a)(i) in respect of such fiscal year or an
independent actuarial consulting firm reasonably satisfactory to the
Agent, which firm shall be provided access to or copies of all reserve
analyses and valuations relating to the insurance business of each
Insurance Subsidiary in the possession of or available to the Borrower
or its Subsidiaries stating that the loss reserves of the Insurance
Subsidiaries (on an aggregate basis) as of the last day of such fiscal
year (A) make a reasonable provision in the aggregate for all unpaid
losses and loss adjustment expenses, gross and net as to reinsurance
ceded, under the terms of the Insurance Subsidiaries' policies, (B) are
computed in a manner that conforms to the appropriate Standards of
Practice of the Actuarial Standards Board, (C) are computed on the basis
of similar general methods as used as of the last day of the preceding
fiscal year and (D) meet the relevant requirements of the insurance laws
of the jurisdictions where the Insurance Subsidiaries are domiciled.
(b) QUARTERLY FINANCIAL STATEMENTS. (i) As soon as available and
in any event within 60 days after the close of each of the first three
quarterly accounting periods in each fiscal year of the Borrower, (x)
the consolidated balance sheet of the Borrower and its Subsidiaries as
at the end of such quar-
29
terly period and the related consolidated statements statements of
income, of stockholders' equity and of cash flows for such quarterly
period and for the elapsed portion of the fiscal year ended with the
last day of such quarterly period, and (y) the balance sheet of the
Borrower and FFC (on a stand alone basis in the case of the Borrower and
on a consolidated basis in the case of FFC) as at the end of such fiscal
quarter and the related statements of income and of stockholders' equity
for such quarterly period and for the elapsed portion of the fiscal year
ended with the last day of such quarterly period; in each case setting
forth comparative figures for the related periods in the prior fiscal
year (prepared in accordance with GAAP), and all of which shall be
certified by the Chief Financial Officer or other Authorized Officer of
the Borrower, subject to changes resulting from normal year-end audit
adjustments.
(ii) As soon as available and in any event (x) within 90 days after
the close of each of the first three quarterly accounting periods in
each fiscal year of the Borrower, quarterly financial statements of FIC
(on a combined basis and prepared in accordance with SAP) for such
fiscal period, together with the opinion thereon of the Chief Financial
Officer or other Authorized Officer of the Borrower stating that such
financial statements fairly present the financial condition and results
of operations of FIC in accordance with SAP, and (y) within 60 days
after the close of each of the first three quarterly accounting periods
in each fiscal year of the Borrower, quarterly financial statements of
each Material Insurance Subsidiary (prepared in accordance with SAP) for
such fiscal period, together with the opinion thereon of the Chief
Financial Officer or other Authorized Officer of the Borrower stating
that such financial statements fairly present the financial condition
and results of operations of each such Material Insurance Subsidiary in
accordance with SAP.
(iii) As soon as available and in any event within 45 days after the
close of each of the first three quarterly accounting periods in each
fiscal year of the Borrower, the call report with respect to FIL for
such fiscal quarter, certified by the Chief Financial Officer or other
Authorized Officer of the Borrower, subject to changes resulting from
normal year-end audit adjustments.
(c) OFFICER'S CERTIFICATES. At the time of the delivery of the
financial statements provided for in Sections 6.01(a) and (b), a
certificate of the Chief Financial Officer or other Authorized Officer
of the Borrower to the effect that no Default or Event of Default exists
or, if any Default or Event of Default does exist, specifying the nature
and extent thereof, which certificate shall set forth the calculations
required to establish whether the Borrower and its Subsidiaries were in
compliance with the provisions of Sections 6.11, 7.05 and 7.10 through
7.15 as at the end of such fiscal year or quarter, as the case may be.
(d) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any event
within three Business Days after a senior officer of the Borrower
obtains
30
knowledge thereof, notice of (x) the occurrence of any event which
constitutes a Default or Event of Default, which notice shall specify
the nature thereof, the period of existence thereof and what action the
Borrower proposes to take with respect thereto and (y) any litigation or
governmental or regulatory proceeding pending against the Borrower or
any of its Subsidiaries which is likely to have a material adverse
effect on the condition (financial or otherwise, determined pursuant to
GAAP or SAP), businesses, operations, properties, assets, liabilities or
investments of the Borrower and its Subsidiaries taken as a whole or the
ability of the Borrower to perform its obligations hereunder or under
any other Credit Document.
(e) AUDITORS' REPORTS. Promptly upon receipt thereof, a copy of
each other report or "management letter" submitted to the Borrower or
any of its Subsidiaries by their independent accountants or independent
actuaries in connection with any annual, interim or special audit made
by them of the books of the Borrower or any of its Subsidiaries (it
being understood and agreed that if the Borrower receives any such
report or "management letter" that relates to the Borrower and its
Subsidiaries on a consolidated basis, the delivery of such report or
letter will satisfy the provisions of this clause (e)).
(f) LOSS RESERVE REPORT. As promptly as reasonably practicable
following a request therefor by the Agent or the Required Banks, a
report prepared by an independent accounting or actuarial consulting
firm of recognized professional standing selected by the Agent or the
Required Banks reviewing the adequacy of loss reserves of the Insurance
Subsidiaries (on an aggregate basis), which firm shall be provided
access to or copies of all reserve analyses and valuations relating to
the insurance business of each such Insurance Subsidiary in the
possession of or available to the Borrower or its Subsidiaries; PROVIDED
that (x) no more than one request may be made pursuant to this clause
(f) during any 20-month period, and (y) the cost of such review and
report shall be for the account of the Banks (PRO RATA according to
their respective Commitments).
(g) OTHER REGULATORY STATEMENTS AND REPORTS. Promptly (A) after
their becoming available, copies of any statutory financial statements
which are not otherwise delivered pursuant to Sections 6.01(a) through
(f), inclusive, and which the Borrower or any Regulated Insurance
Company periodically files with the Applicable Insurance Regulatory
Authority of the state in which it is domiciled or any state in which it
is deemed to be commercially domiciled or any governmental agency or
agencies substituted therefor (including all exhibits and schedules
thereto); provided that, notwithstanding anything to the contrary
contained in this clause (A), no statutory financial statements of an
Insurance Subsidiary that is not a Material Insurance Subsidiary shall
be required to be furnished, (B) after receipt thereof, copies of all
regular and periodic reports of reviews or examinations (including,
without limitation, triennial examinations
31
and risk based capital reports) of any Regulated Insurance Company that
is a Subsidiary, or any of them, delivered to such Person by any
Applicable Insurance Regulatory Authority, insurance commission or
similar regulatory authority, (C) after receipt thereof, written notice
of any assertion by any Applicable Insurance Regulatory Authority or any
governmental agency or agencies substituted therefor, as to a violation
of any Legal Requirement by any Regulated Insurance Company which is
likely to have a material adverse effect on the condition (financial or
otherwise, determined pursuant to GAAP or SAP), businesses, operations,
properties, assets, liabilities or investments of the Borrower and its
Subsidiaries taken as a whole or the ability of the Borrower to perform
its obligations hereunder or under any other Credit Document, (D) after
receipt thereof, a copy of the final report to each Regulated Insurance
Company from the NAIC for each fiscal year, as to such Company's
compliance or noncompliance with each of the NAIC Tests, (E) after
receipt thereof, a copy of A.M. Best's rating analysis for FIC on a
combined basis for each fiscal year, (F) and in any event within three
Business Days after receipt thereof, copies of any notice of actual
suspension, termination or revocation of any license of any Regulated
Insurance Company by any Applicable Insurance Regulatory Authority
(other than any termination voluntarily effected by such Regulated
Insurance Company), including any request by an Applicable Insurance
Regulatory Authority which commits a Regulated Insurance Company to take
or refrain from taking any action or which otherwise affects the
authority of such Regulated Insurance Company to conduct its business,
and (G) and in any event within three Business Days after the Borrower
or any of its Subsidiaries obtains knowledge thereof, notice of any
actual changes in the insurance laws enacted in any state in which any
Regulated Insurance Company is domiciled which, in the case of the
foregoing clause (F) or (G), could (in the reasonable judgment of the
Borrower) have a material adverse effect on the condition (financial or
otherwise, determined pursuant to GAAP or SAP), businesses, operations,
properties, assets, liabilities or investments of the Borrower and its
Subsidiaries taken as a whole or on the ability of the Borrower to
perform its obligations under any Credit Document.
(h) CREDIT RATING CHANGES. Promptly, and in any event within
three Business Days after a senior officer of the Borrower obtains
knowledge thereof, notice of any change in the credit rating assigned by
Xxxxx'x or S&P to any long-term debt of the Borrower (including without
limitation any change in the Xxxxx'x Credit Rating or the S&P Credit
Rating).
(i) OTHER INFORMATION. Promptly upon transmission thereof, copies
of any filings and registrations with, and reports to, the SEC by the
Borrower or any of its Subsidiaries (other than any registration
statement on Form S-8) and copies of all financial statements, proxy
statements, notices and reports as the Borrower or any of its
Subsidiaries shall send to analysts generally or to the holders (other
than the Borrower and its Subsidiaries) of their capital stock in
32
their capacity as such holders (in each case to the extent not
theretofore delivered to the Banks pursuant to this Agreement) and, with
reasonable promptness, such other information or documents (financial or
otherwise) as the Agent or any Bank may reasonably request from time to
time.
6.02 BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and will
cause each of its Subsidiaries to, keep proper books of record and account in
which full, true and correct entries in conformity in all material respects with
GAAP or SAP, as the case may be, and all requirements of law shall be made of
all dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of its Subsidiaries to, permit officers and
designated representatives of the Agent or any Bank to visit and inspect, during
regular business hours and under guidance of officers of the Borrower or such
Subsidiary, any of the properties or assets of the Borrower and any of its
Subsidiaries in whomsoever's possession (but only to the extent the Borrower or
such Subsidiary has the right to do so to the extent in the possession of
another Person), and to examine the books of account of the Borrower and any of
its Subsidiaries and discuss the affairs, finances and accounts of the Borrower
and of any of its Subsidiaries with, and be advised as to the same by, its and
their officers and independent accountants and independent actuaries, if any,
all at such reasonable times and intervals and to such reasonable extent as the
Agent or such Bank may request; PROVIDED, that so long as no Event of Default
has occurred and is continuing, such inspections shall not be made more
frequently than semiannually.
6.03 INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect insurance in
such amounts, covering such risks and liabilities and with such deductibles or
self-insured retentions as are in accordance with normal industry practice. The
Borrower will, and will cause each of its Subsidiaries to, furnish annually to
the Banks a summary of the insurance carried.
6.04 PAYMENT OF TAXES. The Borrower will pay and discharge, and
will cause each of its Subsidiaries to pay and discharge, all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any properties belonging to it, prior to the date on which
penalties attach thereto, and all lawful claims (other than claims relating to
the adjustment or settling, in the ordinary course of business, of claims in
respect of insurance policies or reinsurance contracts) which, if unpaid, might
become a Lien or charge upon any properties of the Borrower or any of its
Subsidiaries; PROVIDED that neither the Borrower nor any Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim which is being
contested in good faith and by proper proceedings if it has maintained adequate
reserves with respect thereto in accordance with GAAP or SAP, as the case may
be.
6.05 CORPORATE FRANCHISES. The Borrower will do, and will cause
each Subsidiary to do, or cause to be done, all things necessary to preserve and
keep in full
33
force and effect its corporate existence, rights and authority, PROVIDED that
any transaction permitted by Section 7.02 will not constitute a breach of this
Section 6.05.
6.06 COMPLIANCE WITH STATUTES, ETC. The Borrower will, and will
cause each Subsidiary to, comply in all material respects with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls).
6.07 ERISA. As soon as possible and, in any event, within 10 days
after the Borrower or any Subsidiary knows or has reason to know any of the
following (and with regard to Plans with respect to which an ERISA Affiliate
contributes pursuant to collective bargaining requirements or maintains, the
Borrower shall use its best efforts to obtain information therefrom regarding
any of the following), the Borrower will deliver to each of the Banks a
certificate of the Chief Financial Officer or other Authorized Officer of the
Borrower setting forth details as to such occurrence and such action, if any,
which the Borrower, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given to
or filed with or by the Borrower, the Subsidiary, the ERISA Affiliate, the PBGC,
a Plan participant (other than notices relating to an individual participant's
benefits) or the plan administrator with respect thereto: that a Reportable
Event has occurred, that an accumulated funding deficiency has been incurred or
an application has been or could reasonably be expected to be made to the
Secretary of the Treasury for a waiver or modification of the minimum funding
standard (including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan, that a
Plan which has an Unfunded Current Liability has been or could reasonably be
expected to be terminated, reorganized, partitioned or declared insolvent under
Title IV of ERISA, that a Plan has an Unfunded Current Liability giving rise to
a lien under ERISA or the Code, that proceedings have been or could reasonably
be expected to be instituted to terminate a Plan which has an Unfunded Current
Liability, that a proceeding has been instituted pursuant to Section 515 of
ERISA to collect a delinquent contribution to a Plan, or that the Borrower, any
Subsidiary or any ERISA Affiliate will or could reasonably be expected to incur
any liability (including any contingent or secondary liability) to or on account
of the termination of or withdrawal from a Plan under Section 4062, 4063, 4064,
4201 or 4204 of ERISA. Upon request of a Bank, the Borrower will deliver to such
Bank a complete copy of the annual report (Form 5500) of each Plan required to
be filed with the Internal Revenue Service. In addition to any certificates or
notices delivered to the Banks pursuant to the first sentence hereof, copies of
any notices received by the Borrower or any Subsidiary required to be delivered
to the Banks hereunder shall be delivered to the Banks no later than 10 days
after the later of the date such notice has been filed with the Internal Revenue
Service or the PBGC, given to Plan participants (other than notices relating to
an individual participant's benefits) or received by the Borrower or such
Subsidiary.
34
6.08 PERFORMANCE OF OBLIGATIONS. The Borrower will, and will
cause each of its Subsidiaries to, perform all of its obligations under the
terms of each mortgage, deed of trust, indenture, loan agreement, security
agreement, other debt instrument and each other material agreement, contract or
instrument by which it is bound or to which it is a party, except such
non-performance as could not individually or in the aggregate, reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise, determined in accordance with GAAP or SAP), businesses, operations,
properties, assets, liabilities or investments of the Borrower and its
Subsidiaries taken as a whole.
6.09 GOOD REPAIR. The Borrower will, and will cause each of its
Subsidiaries to, to the extent and in the manner customary for companies in
similar businesses, ensure that its material properties and equipment used or
useful in its business in whomsoever's possession they may be, are kept in good
repair, working order and condition, normal wear and tear excepted, and that
from time to time there are made in such properties and equipment all needful
and proper repairs, renewals, replacements, extensions, additions, betterments
and improvements thereto.
6.10 END OF FISCAL YEARS; FISCAL QUARTERS. The Borrower will, for
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries' fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries', fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
6.11 NAIC TESTS. The Borrower shall cause FIC and its
Subsidiaries to maintain risk-based capital ratios that are above the minimum
levels required by the NAIC Tests below which FIC or such Subsidiary may be
required to take action of any kind as a result of such ratios (including
communication with regulatory authorities required as a result of the failure to
maintain such minimum ratio levels, etc.).
SECTION 7. NEGATIVE COVENANTS. The Borrower hereby covenants and
agrees that on the Effective Date and thereafter, for so long as this Agreement
is in effect and until such time as the Total Commitment has terminated, no
Notes are outstanding and the Loans and Competitive Bid Loans, together with
interest, Fees and all other Obligations incurred hereunder, are paid in full:
7.01 CHANGES IN BUSINESS. The Borrower will not, and will not
permit any of its Subsidiaries to, make equity investments to acquire ownership
or control of businesses other than property and casualty insurance and
financial services businesses (and businesses incidental or reasonably related
thereto) in an aggregate amount exceeding $20,000,000 at any time outstanding.
Notwithstanding the preceding sentence, no Insurance Subsidiary shall engage in
any business other than the ownership and management of property and casualty
insurance operations, workers compensation insurance operations and businesses
reasonably related or incidental thereto; no
35
Financial Services Non-Thrift Subsidiary shall engage in any business other than
the ownership and management of financial services operations and businesses
reasonably related or incidental thereto; and no Thrift Subsidiary shall engage
in any business other than the ownership and management of thrift operations and
businesses reasonably related or incidental thereto.
7.02 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC. The
Borrower will not, and will not permit any Subsidiary to, wind up, liquidate or
dissolve its affairs, or enter into any transaction of merger or consolidation,
or convey, sell, lease or otherwise dispose of (in one transaction or a series
of related transactions) all or any substantial part of its property or assets,
(but excluding any sale or disposition of property or assets in the ordinary
course of business), or purchase, lease or otherwise acquire (in one transaction
or a series of related transactions) all or any part of the property or assets
of any Person (excluding any purchases, leases or other acquisitions of property
or assets in, and for use in, the ordinary course of business, other than
Capital Expenditures, except to the extent permitted by clause (e) below, and
Investments, except to the extent permitted by clause (f) below) or agree to do
any of the foregoing at any future time, except that the following shall be
permitted:
(a) So long as no Default or Event of Default exists or would
exist immediately after giving effect thereto, the merger or
consolidation of any Wholly-Owned Subsidiary of the Borrower with or
into another Wholly-Owned Subsidiary of the Borrower, PROVIDED that no
Insurance Subsidiary may merge or consolidate with any Financial
Services Subsidiary;
(b) Any Subsidiary (other than FCIG) not engaged to any
significant extent in any business other than acting as a holding
company for other Subsidiaries of the Borrower may be liquidated, wound
up, dissolved, or merged with its direct parent (if other than the
Borrower) or direct Subsidiary;
(c) The Borrower and its Subsidiaries may acquire new businesses
or operations (including without limitation by acquiring new
Subsidiaries) (each, a "Permitted Acquisition"), PROVIDED that (i) no
Default or Event of Default exists or would exist immediately after
giving effect thereto, (ii) the value of the assets of such acquired
entity shall not exceed 40% of the value of the assets of the Borrower
and its Subsidiaries on a consolidated basis as of the last day of the
most recently ended fiscal quarter as determined on the date on which
any one or more of the Borrower or its Subsidiaries enters into a
binding agreement to effect such Permitted Acquisition and (iii) to the
extent that the consideration paid by the Borrower in respect of any
such acquisition is other than all capital stock of the Borrower
(including without limitation cash and/or assumption of Indebtedness),
the aggregate amount of consideration paid by the Borrower and its
Subsidiaries in respect thereof, shall not exceed 30% of the
Consolidated Net Worth of the Borrower as of the last day of the most
recently recorded fiscal quarter as determined on the date on which any
one or more of the Borrower
36
and its Subsidiaries enters into a binding agreement to effect such
Permitted Acquisition;
(d) The Borrower and its Subsidiaries may make Capital
Expenditures so long as the aggregate amount thereof made in any fiscal
year does not exceed $35,000,000, provided that if Capital Expenditures
made by the Borrower and its Subsidiaries in any fiscal year are less
than $35,000,000, then in the immediately succeeding fiscal year the
Borrower and its Subsidiaries may make Capital Expenditures in an amount
up to the sum of (i) $35,000,000 plus (ii) the lesser of (x) the
unutilized amount from the immediately preceding fiscal year and (y)
$7,500,000;
(e) The Borrower and its Subsidiaries may acquire and dispose of
Investments so long as the Borrower is in compliance with Section 7.05
before and after giving effect thereto;
(f) The Securitization Subsidiaries may (i) convey and transfer,
or, as the case may be, purchase and acquire, the interests contemplated
by the securitization transactions to which they respectively are or may
after the date hereof become parties, (ii) purchase or sell
participating interests, whether evidenced by certificates, debt
instruments, or otherwise, in the securitization transactions to which
they respectively are or may after the date hereof become parties and
(iii) be liquidated, wound up or dissolved following the termination of
the securitization transactions to which they are respectively parties;
and
(g) The Acquisition shall be permitted so long as (i) no Default
or Event of Default exists or would exist immediately after giving
effect thereto and (ii) after giving effect to such Acquisition 100% of
the capital stock of Industrial is owned, directly or indirectly, by
FCIG.
7.03 LIENS. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of any kind (real or personal, tangible or
intangible (including, without limitation, the capital stock of any of the
Borrower's Subsidiaries) of the Borrower or any such Subsidiary whether now
owned or hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable or notes with recourse to the
Borrower or any of its Subsidiaries) or assign any right to receive income, or
file or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute, except:
(a) Liens for taxes not yet due or Liens for taxes being
contested in good faith and by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP or SAP,
as the case may be;
37
(b) Liens in respect of property or assets of any of the
Borrower's Subsidiaries imposed by law which were incurred in the
ordinary course of business, such as carriers', warehousemen's and
mechanics' Liens and other similar Liens arising in the ordinary course
of business, and (x) which do not in the aggregate materially detract
from the value of such property or assets or materially impair the use
thereof in the operation of the business of the Borrower or any
Subsidiary or (y) which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property or asset subject to such Lien;
(c) Liens created by this Agreement or the other Credit
Documents;
(d) Liens in existence on the Effective Date which are listed,
and the property subject thereto on the Effective Date described, in
Annex VI, without giving effect to any extensions or renewals thereof;
(e) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 8.08;
(f) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business (exclusive of
obligations in respect of the payment for borrowed money);
(g) Leases or subleases granted to others not interfering in any
material respect with the business of the Borrower or any of its
Subsidiaries and any interest or title of a lessor under any lease not
in violation of this Agreement;
(h) Easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(i) Liens arising from UCC financing statements regarding leases
or other precautionary UCC filings in respect of transactions not giving
rise to Indebtedness, and in each case not in violation of this
Agreement;
(j) Liens incurred in the ordinary course of business by the
Borrower or any Regulated Insurance Company on securities to secure
repurchase and reverse repurchase obligations in respect of such
securities;
38
(k) Liens constituting pledges or deposits of cash or securities
made by any Regulated Insurance Company as a condition to obtaining or
maintaining any licenses issued to it by any Applicable Insurance
Regulatory Authority;
(l) Liens arising pursuant to purchase money mortgages securing
Indebtedness representing the purchase price (or financing of the
purchase price within 90 days after the respective purchase) of assets
acquired after the Effective Date, PROVIDED that (i) any such Liens
attach only to the assets so purchased, attachments thereto and proceeds
thereof, (ii) the principal amount of the Indebtedness secured by any
such Lien does not exceed 100%, nor is less than 70%, of the lesser of
the fair market value or the purchase price of the property being
purchased at the time of the incurrence of such Indebtedness and (iii)
the aggregate outstanding principal amount of Indebtedness secured by
Liens permitted by this clause (l) shall not exceed 3.5% of Consolidated
Net Worth at any time;
(m) Liens on property or assets acquired pursuant to Section
7.02(c) after the Effective Date, or on property or assets of a
Subsidiary of the Borrower in existence at the time such Subsidiary is
acquired pursuant to Section 7.02(c), PROVIDED that (i) any Indebtedness
that is secured by such Liens is otherwise permitted to be incurred
under Section 7.04, and (ii) such Liens are not incurred in
contemplation of such acquisition and do not attach to any other asset
of the Borrower or any of its Subsidiaries;
(n) Liens which constitute rights of set-off of a customary
nature or bankers' liens on amounts on deposit, whether arising by
contract or by operation of law, in connection with arrangements entered
into with depository institutions in the ordinary course of business;
(o) Liens encumbering customary initial deposits and margin
deposits, and similar Liens attaching to commodity trading accounts or
other brokerage accounts and the funds or investments on deposit
therein, incurred in the ordinary course of business, securing
Indebtedness under Interest Rate Protection Agreements or Other Hedging
Agreements or in respect of repurchase obligations permitted by Section
7.04(f);
(p) Liens constituting extensions, renewals or replacements of
any Lien referred to in clause (l) or (m) above, PROVIDED that the
principal amount of the Indebtedness secured thereby is not increased
and that any such extension, renewal or replacement Lien attaches only
to the property originally encumbered thereby;
(q) Liens on assets of the Thrift Subsidiaries securing
Indebtedness owing by such Thrift Subsidiaries to the Federal Home Loan
Bank;
39
(r) Liens on assets of the Securitization Subsidiaries;
(s) Liens on assets of FCMF or on assets of any Subsidiary of
FCMF (other than any such Subsidiary that engages in banking or thrift
operations or the activities of which are limited to holding the stock
or securities of another Subsidiary or Subsidiaries of FCMF engaged in
banking or thrift operations), PROVIDED that (i) the principal amount of
the Indebtedness secured by any such Lien does not exceed 80% of the
lesser of the fair market value or the purchase price of asset being
encumbered at the time of the incurrence of such Indebtedness and (ii)
the aggregate outstanding principal amount of Indebtedness secured by
Liens permitted by this clause (s) shall not exceed $300,000,000 at any
time; and
(t) Liens in favor of the trustee for the holders of the TOPRS
to secure its fees and expenses.
7.04 INDEBTEDNESS. The Borrower will not, and will not permit any
of its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the
other Credit Documents;
(b) Permitted Subordinated Debt;
(c) Indebtedness (including, without limitation, Contingent
Obligations) in existence on the Effective Date which is listed on Annex
V, without giving effect to any subsequent extension, renewal or
refinancing thereof;
(d) Indebtedness of the Borrower incurred after the Effective
Date constituting guaranties of Indebtedness of the Financial Services
Non-Thrift Subsidiaries;
(e) Permitted Acquisition Debt of any Insurance Subsidiary;
(f) Repurchase or reverse repurchase obligations of the Borrower
or any Insurance Subsidiary incurred in the ordinary course of business
for short term liquidity management purposes;
(g) Additional Indebtedness of Insurance Subsidiaries consisting
of reimbursement obligations in respect of letters of credit, or other
Contingent Obligations, so long as the aggregate outstanding principal
amount of Indebtedness incurred under this clause (g) does not exceed
$20,000,000 at any time;
40
(h) other Indebtedness of Insurance Subsidiaries not to exceed
1% of FIC Combined Surplus at any time;
(i) Indebtedness of (x) the Financial Services Non-Thrift
Subsidiaries, PROVIDED, that the proceeds of such Indebtedness (other
than the proceeds of securitization transactions entered into by
Securitization Subsidiaries) are used to fund the operations of, and
acquisitions by, such Financial Services Non-Thrift Subsidiaries and no
part of such proceeds are advanced, loaned or distributed to the
Borrower or any of its other Subsidiaries (other than other Financial
Services Non-Thrift Subsidiaries), and (y) the Thrift Subsidiaries,
PROVIDED, that the proceeds of such Indebtedness are used to fund the
operations of, and acquisitions by, such Thrift Subsidiaries and no part
of such proceeds are advanced, loaned or distributed to the Borrower or
any of its other Subsidiaries (other than other Thrift Subsidiaries);
(j) Indebtedness owing to brokers in respect of accounts
maintained with such brokers, including margin deposits, incurred in the
ordinary course of business;
(k) Indebtedness consisting of Interest Rate Protection
Agreements or Other Hedging Agreements entered into by the Borrower or
any of its Subsidiaries in the ordinary course of business, so long as
such Agreements are entered into in respect of the assets or obligations
of the Borrower or such Subsidiary for bona fide hedging purposes and
not for purposes of speculation;
(l) Indebtedness of the Borrower owing to any Subsidiary (other
than a Thrift Subsidiary), Indebtedness of any Subsidiary (other than a
Thrift Subsidiary) owing to the Borrower, Indebtedness of any Insurance
Subsidiary owing to any other Insurance Subsidiary, Indebtedness of any
Financial Services Non-Thrift Subsidiary owing to any other Financial
Services Non-Thrift Subsidiaries and Indebtedness of any Thrift
Subsidiary owing to any other Thrift Subsidiary;
(m) any guaranty by an Insurance Subsidiary of the obligations of
another Insurance Subsidiary, or by a Financial Services Non-Thrift
Subsidiary of the obligations of another Financial Services Non-Thrift
Subsidiary, or by a Thrift Subsidiary of the obligations of another
Thrift Subsidiary;
(n) purchase money debt not exceeding 3.5% of Consolidated Net
Worth at any time;
(o) any guaranty by the Borrower of any ESOP Loan; and
41
(p) additional unsecured Indebtedness of the Borrower, so long as
(i) at the time of the incurrence of any such Indebtedness no Default or
Event of Default exists or would result from the incurrence thereof,
(ii) at the time of the incurrence of any such Indebtedness, the
Borrower will be in compliance with Sections 7.12 and 7.14 determined on
a pro forma basis as if such Indebtedness were outstanding and (iii) no
such Indebtedness shall mature, or be subject to any mandatory
prepayment, redemption, put or similar requirement prior to the Final
Maturity Date.
7.05 INVESTMENTS. (a) The Borrower will not permit any Insurance
Subsidiary to purchase or otherwise acquire any Non-Investment Grade Security if
at such time, or immediately after giving effect thereto, the fair market value
(determined on a consolidated basis) of all Investments of the Insurance
Subsidiaries (other than Investments in the Insurance Subsidiaries) in
Non-Investment Grade Securities would exceed 10% of the fair market value
(determined on a consolidated basis) of all Investments of the Insurance
Subsidiaries (other than Investments in Insurance Subsidiaries).
(b) The Borrower will not permit the fair market value
(determined on a consolidated basis) of all real property (including real
property leasehold interests) and mortgage loans (excluding mortgage-backed
securities) held by the Insurance Subsidiaries to exceed 5% of the fair market
value (determined on a consolidated basis) of all Investments of the Insurance
Subsidiaries (other than Investments in Insurance Subsidiaries).
(c) The Borrower will not permit the fair market value of all
real property (including real property leasehold interests) and mortgage loans
(excluding mortgage-backed securities) held by the Borrower to exceed 5% of
Consolidated Net Worth at any time.
(d) The Borrower will not, and will not permit FIC and its
Subsidiaries to, materially alter their respective investment strategies from
those in effect on the Effective Date.
(e) The Borrower will not permit any Insurance Subsidiary to make
or permit to remain outstanding any Investment in the Borrower or any of its
Subsidiaries or Affiliates (other than another Insurance Subsidiary) if the
aggregate book value of all such Investments shall at any time exceed 25% of FIC
Combined Surplus at such time.
(f) The Borrower will not, and will not permit any of its
Subsidiaries to, make any real estate construction loans.
(g) The Borrower will not, and will not permit any of its
Subsidiaries (other than Thrift Subsidiaries) to, lend money or credit or make
advances to any Thrift
42
Subsidiary, or purchase or acquire any capital stock, obligations (including
loans) or securities of, or any other interest in, or make any capital
contribution to, any Thrift Subsidiary.
7.06 PREPAYMENTS AND MODIFICATIONS OF PERMITTED SUBORDINATED DEBT
AND LIQUID YIELD OPTION NOTES. The Borrower will not, and will not permit any of
its Subsidiaries to:
(a) make (or give any notice in respect thereof) any voluntary or
optional payment or prepayment or redemption or repurchase (including by
virtue of the exercise of any put right) or acquisition for value of
(including, without limitation, by way of depositing with the trustee
with respect thereto money or securities before due for the purpose of
paying when due), or exchange of, the Liquid Yield Option Notes or,
after its issuance, any Permitted Subordinated Debt; provided, that the
Borrower may pay premiums to holders of its Liquid Yield Option Notes as
exchange fees upon the conversion thereof to equity securities; or
(b) amend or modify (or permit the amendment or modification of)
any of the terms or provisions of the Liquid Yield Option Notes or,
after its issuance, any Permitted Subordinated Debt, except for
amendments or modifications the sole effect of which is to reduce the
interest rate, extend the maturity, waive covenant compliance or reduce
covenant requirements and do not involve the payment of any fee or other
compensation to the holders of the Liquid Yield Option Notes or, after
its issuance, such Permitted Subordinated Debt.
7.07 RESTRICTIONS ON SUBSIDIARY PAYMENTS. The Borrower will not,
and will not permit any of its Insurance Subsidiaries to, create or otherwise
cause or suffer to exist any encumbrance or restriction which prohibits or
otherwise restricts (x) the ability of any Insurance Subsidiary to (a) pay
dividends or make other distributions or pay any Indebtedness owed to the
Borrower or any Insurance Subsidiary, (b) make loans or advances to the Borrower
or any Insurance Subsidiary, (c) transfer any of its properties or assets to the
Borrower or any Insurance Subsidiary or (d) guarantee the Obligations or (y) the
ability of the Borrower or any Insurance Subsidiary of the Borrower to create,
incur, assume or suffer to exist any Lien upon its property or assets to secure
the Obligations, other than prohibitions or restrictions existing under or by
reason of (i) this Agreement or the other Credit Documents, (ii) Legal
Requirements, (iii) customary non-assignment provisions entered into in the
ordinary course of business and consistent with past practices, (iv) purchase
money obligations for property acquired in the ordinary course of business, so
long as such obligations are permitted under this Agreement, (v) any restriction
or encumbrance with respect to an Insurance Subsidiary of the Borrower imposed
pursuant to an agreement which has been entered into for the sale or disposition
of all or substantially all of the capital stock or assets of such Insurance
Subsidiary, so long as such sale or disposition is permitted under this
43
Agreement, and (vi) Liens permitted under Section 7.03 and any documents or
instruments governing the terms of any Indebtedness or other obligations secured
by any such Liens, PROVIDED, that such prohibitions or restrictions apply only
to the assets subject to such Liens.
7.08 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any Subsidiary to, enter into any transaction or series of
transactions with any Affiliate (other than the Borrower or a Subsidiary of the
Borrower), other than on terms and conditions substantially as favorable to the
Borrower or such Subsidiary as would be obtainable by the Borrower or such
Subsidiary at the time in a comparable arm's-length transaction with a Person
other than an Affiliate. In addition, in transactions in which the Borrower
purchases or participates in loans made by a Financial Services Subsidiary, the
Borrower and such Financial Services Subsidiary will not use selection criteria
for determining the particular loans that will be purchased or participated in
by the Borrower that are adverse to the Borrower.
7.09 ISSUANCE OF STOCK. The Borrower will not issue any shares of
preferred stock, preference stock or redeemable common stock. The Borrower shall
not permit any of its Insurance Subsidiaries to issue any shares of common
stock, preferred stock, preference stock or redeemable common stock or any
options or warrants to purchase, or securities convertible into, any such stock,
except for common stock issued to the Borrower or Wholly-Owned Subsidiaries of
the Borrower.
7.10 LIABILITIES TO POLICYHOLDER SURPLUS RATIO. The Borrower
shall not permit the Liabilities to Policyholder Surplus Ratio of all
Subsidiaries of FCIG which are Regulated Insurance Companies (determined on a
combined basis) at any time to exceed 6.00 to 1.
7.11 NET PREMIUMS WRITTEN RATIO. The Borrower will not permit the
ratio of (i) Net Premiums Written of all Subsidiaries of FCIG which are
Regulated Insurance Companies (determined on a combined basis) for any fiscal
year to (ii) Policyholder Surplus of all Subsidiaries of FCIG which are
Regulated Insurance Companies (determined on a combined basis) on the last day
of such fiscal year to exceed 3.0:1.0.
7.12 LEVERAGE RATIO. The Borrower will not permit the ratio of
(i) Total Indebtedness to (ii) Total Capitalization at any time to exceed 0.45
to 1.0:
7.13 MINIMUM CONSOLIDATED NET WORTH. The Borrower will not permit
Consolidated Net Worth at any time to be less than $475,000,000.
7.14 INTEREST COVERAGE RATIO. The Borrower will not permit the
ratio of (i) Consolidated EBIT to (ii) Consolidated Interest Expense for any
period of four consecutive fiscal quarters of the Borrower (taken as one
accounting period) to be less than 3.0 to 1.0.
44
7.15 FIC COMBINED SURPLUS. The Borrower will not permit FIC
Combined Surplus at any time to be less than $400,000,000.
7.16 INSURED DEPOSITORY SUBSIDIARIES. (a) The Borrower will not
permit any Insured Depository Subsidiary to be or become "undercapitalized",
"significantly undercapitalized" or "critically undercapitalized" for purposes
of 12 U.S.C. ss. 1831o, as amended, restated or redesignated from time to time.
(b) The Borrower shall not, nor shall it permit any Subsidiary
(including, without limitation, any Insured Depository Subsidiary) to, submit a
"capital restoration plan" or enter into a "capital management agreement" under
12 U.S.C. ss. 1831o(b)(2)(C), as amended, restated or redesignated from time to
time, with respect to any Insured Depository Subsidiary.
SECTION 8 EVENTS OF DEFAULT. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
8.01 PAYMENTS. The Borrower shall (i) default in the payment when
due of any principal of the Loans or Competitive Bid Loans or (ii) default, and
such default shall continue for two or more days, in the payment when due of any
interest on the Loans or Competitive Bid Loans or any Fees or any other amounts
owing hereunder or under any other Credit Document; or
8.02 REPRESENTATIONS, ETC. Any representation, warranty or
statement made or deemed made by the Borrower or any of its Subsidiaries herein
or in any other Credit Document or in any statement or certificate delivered or
required to be delivered pursuant hereto or thereto shall prove to have been
untrue in any material respect on the date as of which made or deemed made; or
8.03 COVENANTS. The Borrower shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 6.10, 6.11 or 7, or (b) default in the due performance or observance by
it of any term, covenant or agreement (other than those referred to in Sections
8.01, 8.02, 8.07 or clause (a) of this Section 8.03) contained in this Agreement
or in the Pledge Agreement and such default shall continue unremedied for a
period of at least 30 consecutive days; or
8.04 DEFAULT UNDER OTHER AGREEMENTS. (a) The Borrower or any of
its Subsidiaries shall (i) default in any payment with respect to Indebtedness
(other than the Loans and Competitive Bid Loans) in excess of $5,000,000 (or its
equivalent in any other currency) individually or in the aggregate, for the
Borrower and its Subsidiaries, beyond the period of grace, if any, provided in
the instrument or agreement under which such Indebtedness was created or (ii)
default in the observance or performance of any agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event
45
shall occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause (determined
without regard to whether any notice or lapse of time is required), any such
Indebtedness to become due prior to its stated maturity; or (b) any such
Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be
due and payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof; or
8.05 BANKRUPTCY, ETC. The Borrower or any of its Subsidiaries
shall commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect and applicable,
or any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against the Borrower or any of its Subsidiaries and, with respect to
any such case commenced under the Bankruptcy Code, the petition is not
controverted within 10 days, or is not dismissed within 60 consecutive days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of the Borrower or any of its Subsidiaries; or the Borrower or any of
its Subsidiaries commences (including by way of applying for or consenting to
the appointment of, or the taking of possession by, a rehabilitator, receiver,
custodian, trustee, conservator or liquidator (collectively, a "conservator") of
itself or all or any substantial portion of its property, whether or not
confidential) any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency, liquidation,
rehabilitation, conservatorship or similar law of any jurisdiction whether now
or hereafter in effect relating to the Borrower or any of its Subsidiaries; or
any such proceeding is commenced against (a) any Regulated Insurance Company
which is engaged in the business of underwriting insurance and/or reinsurance in
the United States, whether or not such proceeding is consented to by such
Person, or (b) the Borrower or any of its Subsidiaries (other than any Regulated
Insurance Company described in the immediately preceding clause (a)), whether or
not such proceeding is consented to by such Person but only to the extent that
such proceeding remains undismissed for a period of 60 consecutive days; or the
Borrower or any of its Subsidiaries is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or (a) any Regulated Insurance Company which is engaged in the business of
underwriting insurance and/or reinsurance in the United States suffers any
appointment of any conservator or the like for it or any substantial part of its
property, or (b) the Borrower or any of its Subsidiaries (other than any
Regulated Insurance Company described in the immediately preceding clause (a))
suffers any appointment of any conservator or the like for it or substantially
all of its property which continues undischarged or unstayed for a period of 60
consecutive days; or the Borrower or any of its Subsidiaries makes a general
assignment for the benefit of creditors; or any formal corporate action is taken
by the Borrower or any of its Subsidiaries for the purpose of effecting any of
the foregoing; or
46
8.06 ERISA. (a) Any Plan shall fail to maintain the minimum
funding standard required by Section 412 of the Code for any plan year or part
thereof or a waiver of such standard or extension of any amortization period is
sought or granted under Section 412 of the Code or shall provide security to
induce the issuance of such waiver or extension, (b) any Plan is or shall have
been terminated or the subject of termination proceedings under ERISA or an
event has occurred entitling the PBGC to terminate a Plan under Section 4042(a)
of ERISA, (c) any Plan shall have an Unfunded Current Liability or (d) the
Borrower or a Subsidiary or any ERISA Affiliate has incurred or is likely to
incur a material liability to or on account of a termination of or a withdrawal
from a Plan under Section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; and
there shall result from any such event or events described in the preceding
clauses of this Section 8.06 the imposition of a lien upon the assets of the
Borrower or any Subsidiary or any ERISA Affiliate, the granting of a security
interest, or a liability or a material risk of incurring a liability to the PBGC
or a Plan or a trustee appointed under ERISA or a penalty under Section 4971 or
4975 of the Code or Section 409, 502(i) or 502(l) of ERISA, any of which,
individually or in the aggregate, would have a material adverse effect upon the
condition (financial or otherwise, determined pursuant to GAAP or SAP),
businesses, operations, properties, assets, liabilities, investments or
prospects of the Borrower and its Subsidiaries taken as a whole; or
8.07 PLEDGE AGREEMENT. Except in each case to the extent
resulting from the negligent or willful failure of the Collateral Agent to
retain possession of any Pledged Stock, the Pledge Agreement shall cease to be
in full force and effect, or shall cease to give the Collateral Agent the Liens,
rights, powers and privileges purported to be created thereby (including,
without limitation, a first priority perfected security interest in, and Lien
on, all of the Collateral subject thereto, in favor of the Collateral Agent,
superior to and prior to the rights of all third Persons, and subject to no
other Liens other than Non-Consensual Permitted Liens), or the Borrower or any
other pledgor thereunder shall default in the due performance or observance of
any material term, covenant or agreement on its part to be performed or observed
pursuant to the Pledge Agreement; or
8.08 JUDGMENTS. One or more judgments or decrees shall be entered
against the Borrower or any of its Subsidiaries involving a liability of
$1,000,000 or more in the aggregate for all such judgments and decrees for the
Borrower and its Subsidiaries and any such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 30 days from
the entry thereof; or
8.09 OWNERSHIP. (a) There shall occur a Change of Control;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent shall, upon the written request of the
Required Banks, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Bank to
enforce its claims against the Borrower, except as otherwise specifically
provided for in this Agreement (PROVIDED
47
that if an Event of Default specified in Section 8.05 shall occur with respect
to the Borrower, the result which would occur upon the giving of written notice
by the Agent as specified in clauses (i) and (ii) below shall occur
automatically without the giving of any such notice): (i) declare the Total
Commitment (or the unutilized portion thereof) terminated, whereupon the
Commitment (or the unutilized portion thereof, as the case may be) of each Bank
shall forthwith terminate immediately; (ii) declare the principal of and any
accrued interest in respect of all Loans and Competitive Bid Loans and all
Obligations owing hereunder and under the other Credit Documents to be,
whereupon the same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; and/or (iii) enforce, as Collateral Agent (or direct the
Collateral Agent to enforce), any or all of the Liens and security interests
created pursuant to the Pledge Agreement.
SECTION 9 DEFINITIONS. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"Absolute Rate" shall mean an interest rate (rounded to the
nearest .0001) expressed as a decimal.
"Absolute Rate Borrowing" shall mean a Competitive Bid Borrowing
with respect to which the Borrower has requested that the Banks offer to make
Competitive Bid Loans at Absolute Rates.
"Acquisition" shall mean the acquisition by the Borrower
(directly or indirectly) of all of the outstanding shares of capital stock of
Industrial pursuant to, and in accordance with the terms of, the Acquisition
Agreement.
"Acquisition Agreement" shall mean the Stock Purchase Agreement,
dated as of May 16, 1997 between the Seller and the Borrower.
"Acquisition Documents" shall mean the Acquisition Agreement and
all other agreements and documents relating to the Acquisition.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by, or under direct or
indirect common control with, such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors of such corporation or (ii) to direct or cause the direction of the
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise.
48
"Agent" shall have the meaning provided in the first paragraph of
this Agreement and shall include any successor to the Agent appointed pursuant
to Section 10.09.
"Aggregate Loan Outstandings" shall have the meaning provided in
Section 3.02(a).
"Agreement" shall mean this Credit Agreement, as the same may be
from time to time modified, amended and/or supplemented.
"Applicable Eurodollar Margin" shall mean, for any day, the rate
per annum set forth below opposite the Applicable Rating Period then in effect:
Applicable Rating Applicable Eurodollar
Period Margin
----------------- ---------------------
Category A Period 0.250%
Category B Period 0.300%
Category C Period 0.325%
Category D Period 0.450%
Category E Period 0.575%
"Applicable Facility Fee Percentage" shall mean, for any day, the
percentage set forth below opposite the Applicable Rating Period then in effect:
Applicable Rating Applicable Facility
Period Fee Percentage
----------------- --------------------
Category A Period 0.125%
Category B Period 0.150%
Category C Period 0.175%
Category D Period 0.200%
Category E Period 0.300%
"Applicable Insurance Regulatory Authority" shall mean, when used
with respect to any Regulated Insurance Company, the insurance department or
similar administrative authority or agency located in (x) each state or other
jurisdiction in which such Regulated Insurance Company is domiciled or (y) to
the extent asserting regulatory jurisdiction over such Regulated Insurance
Company, the insurance department, authority or agency in each state or other
jurisdiction in which such Regulated Insurance Company is licensed, and shall
include any Federal insurance regulatory department, authority or agency that
may be created and that asserts regulatory jurisdiction over such Regulated
Insurance Company.
49
"Applicable Rating Period" shall mean, subject to the terms and
conditions set forth below in this definition, the period set forth below then
in effect:
Applicable Rating
Period Criteria
----------------- -------------
Category A Period The S&P Credit Rating is BBB+ or above OR
the Xxxxx'x Credit Rating is Baa1 or above
Category B Period The S&P Credit Rating is BBB or above OR
the Xxxxx'x Credit Rating is Baa2 or above,
but no Category A period is in effect at
such time.
Category C Period The S&P Credit Rating is BBB- or above OR
the Xxxxx'x Credit Rating is Baa3 or above,
but no Category A or B period is in effect
at such time.
Category D Period The S&P Credit Rating is BB+ or above OR the
Xxxxx'x Credit Rating is Ba1 or above, but
no Category A, B or C Period is in effect
at such time.
Category E Period The S&P Credit Rating is below BB+
OR the Xxxxx'x Credit Rating is below Ba1.
If (a) only one of a Xxxxx'x Credit Rating and an S&P Credit Rating exists at
any time (the Rating Agency which has assigned a Credit Rating is hereinafter
referred to as the "Assigning Rating Agency" and the Rating Agency which has no
assigned Credit Rating is hereinafter referred to as the "Non-Assigning Rating
Agency") and (b) the Non-Assigning Rating Agency either (i) states an implied
rating for the Borrower's senior long-term debt and/or (ii) assigns a Credit
Rating to the TOPRS, then the Applicable Rating Period shall be determined as
set forth above based on the Credit Rating of the Assigning Rating Agency and
the stated implied senior debt rating of the Non-Assigning Rating Agency or, if
no such stated implied senior debt rating exists, one "full rating" above the
Credit Rating assigned by the Non-Assigning Rating Agency to the TOPRS (it being
understood that a "full rating" shall include numerical modifiers and (+) and
(-) modifiers). In the event that an Assigning Rating Agency has assigned a
Credit Rating and the Non-Assigning Rating Agency does not state an implied
rating for the Borrower's senior long-term debt or assign a Credit Rating to the
TOPRS, then the Applicable Rating Period shall be determined as set forth above
based on such Credit Rating.
In the event that (a) no Credit Rating exists with respect to the Borrower's
senior long-term debt, then the Applicable Rating Period shall be determined as
follows: (a) if both Xxxxx'x and S&P state an implied rating for any senior
long-term debt of the
50
Borrower, then the Applicable Rating Period shall be determined by reference to
such implied ratings; or (b) if (i) only one of Xxxxx'x and S&P states an
implied rating for any senior long-term debt of the Borrower and (ii) the
Non-Assigning Rating Agency assigns a Credit Rating to the TOPRS, then the
Applicable Rating Period shall be determined as set forth above based on the
stated implied senior debt rating of the Assigning Rating Agency and one "full
rating" above the Credit Rating of the Non-Assigning Rating Agency assigned to
the TOPRS.
In the event that (a) no Credit Rating exists with respect to the Borrower's
senior long-term debt and no stated implied rating exists for the senior
long-term debt of the Borrower, then the Applicable Rating Period shall be
determined as follows: (a) if both Xxxxx'x and S&P assign a Credit Rating to the
TOPRS, then the Applicable Rating Period shall be one "full rating" above such
assigned ratings; (b) if only one of Xxxxx'x and S&P assigns a Credit Rating to
the TOPRS, then the Applicable Rating Period shall be one "full rating" above
the Credit Rating assigned to the TOPRS assigned by the Assigning Rating Agency.
In the event of a split rating of two or more rating levels, the rating level
one below the higher rating level shall apply. If any Credit Rating shall be
changed by Xxxxx'x or S&P, such change shall be effective for purposes of this
definition as of the Business Day following the day on which the Borrower
notifies the Banks of such change pursuant to Section 6.01(h), PROVIDED that if
such change represents a downgrade and the Borrower fails to notify the Banks
thereof pursuant to Section 6.01(h), then such change shall be effective on the
fourth Business Day after a senior officer obtained knowledge of such downgrade.
Any change in the Applicable Rating Period due to a change in a Credit Rating
shall apply during the effective date of such change and ending on the date
immediately preceding the effective date of the next such change. In the event
that and for so long as the Borrower has no senior debt or TOPRS that is rated
by Xxxxx'x or S&P including, without limitation, stated implied rating, then a
Category E Period shall be deemed to exist.
"Authorized Officer" shall mean any senior officer of the
Borrower designated as such in writing by the Borrower to, and found acceptable
by, the Agent.
"Bank" shall have the meaning provided in the first paragraph of
this Agreement.
"Bankruptcy Code" shall have the meaning provided in Section 8.05.
"Base Rate" at any time shall mean the higher of (x) the rate
which is 1/2 of 1% plus the Federal Funds Effective Rate and (y) the Prime
Lending Rate as in effect from time to time.
"Base Rate Loans" shall mean each Loan bearing interest at the
rates provided in Section 1.09(a).
51
"Bermuda" shall mean Fremont Reinsurance Company, Ltd., a
Bermuda corporation.
"Bidder Bank" shall mean each Bank that has notified in writing
(and has not withdrawn such notice) the Agent that it desires to participate
generally in the bidding arrangements relating to Competitive Bid Borrowings.
"Borrower" shall have the meaning provided in the first paragraph
of this Agreement.
"Borrowing" shall mean (i) the incurrence of one Type of Loan by
the Borrower from all of the Banks on a PRO RATA basis on a given date (or
resulting from conversions on a given date), having in the case of Eurodollar
Loans the same Interest Period, PROVIDED that Base Rate Loans incurred pursuant
to Section 1.11(b) shall be considered part of any related Borrowing of
Eurodollar Loans or (ii) a Competitive Bid Borrowing.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any day
which shall be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans or Competitive Bid Loans
priced by reference to the Eurodollar Rate, any day which is a Business Day
described in clause (i) and which is also a day for trading by and between banks
in U.S. dollar deposits in the interbank Eurodollar market.
"Capital Expenditures" shall mean expenditures by any Person
that, in conformity with GAAP, are or are required to be included in the
property, plant or equipment reflected in the balance sheet of such Person.
"Capital Lease" as applied to any Person, shall mean any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in conformity with GAAP, is, or is required to be, accounted for as a capital
lease on the balance sheet of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"Change of Control" shall mean (i) the Borrower shall cease to
own, directly, 100% of the capital stock of FCIG, or FCIG shall cease to own,
directly or indirectly, 100% of the capital stock of FIC and Industrial, (ii)
the acquisition, whether directly or indirectly, by any Person or "group" (as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended)
(other than an employee benefit or stock
52
ownership plan of the Borrower) of more than 30% of the voting stock of the
Borrower or (iii) during any period of 25 consecutive calendar months, a
majority of the Board of Directors of the Borrower shall no longer be composed
of individuals (x) who were members of said Board on the first day of such
period, (y) whose election or nomination to said Board was approved by
individuals referred to in clause (x) above constituting at the time of such
election or nomination at least a majority of said Board or (z) whose election
or nomination to said Board was approved by individuals referred to in clauses
(x) and (y) above constituting at the time of such election or nomination at
least a majority of said Board.
"Chase" shall mean The Chase Manhattan Bank.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.
"Collateral" shall mean all of the Collateral as defined in the
Pledge Agreement.
"Collateral Agent" shall mean the Agent acting as collateral
agent for the Banks.
"Commitment" shall mean, with respect to each Bank, the amount
set forth opposite such Bank's name in Annex I hereto, as the same may be
reduced or terminated pursuant to Sections 2.02, 2.03 and/or 8.
"Competitive Bid Borrowing" shall mean a Borrowing of
Competitive Bid Loans pursuant to Section 1.04.
"Competitive Bid Loan" shall have the meaning provided in
Section 1.01(b).
"Xxxxxxxx" shall mean Xxxxxxxx Insurance Company, an insurance
company organized under the laws of California.
"Consolidated EBIT" shall mean, for any period, the sum of (i)
Consolidated Net Income of the Borrower for such period, (ii) provisions for
taxes based on income or profits to the extent such income or profits were
included in computing Consolidated Net Income for such period and (iii)
Consolidated Interest Expense (including amortization of original issue discount
and the interest component of Capitalized Lease Obligations), net of interest
income, theretofore deducted from earnings in computing Consolidated Net Income
for such period, PROVIDED that in determining Consolidated EBIT for any period
there shall be excluded any portion thereof otherwise included therein (whether
positive or negative) attributable to FFC and its Subsidiaries.
53
"Consolidated Interest Expense" shall mean, for any period, total
interest expense (including that attributable to Capital Leases in accordance
with GAAP) of the Borrower and its Subsidiaries for such period, but excluding
therefrom all interest attributable to FGCC and its Subsidiaries.
"Consolidated Net Income" shall mean, for any period, the net
income (or loss) of the Borrower and its Subsidiaries on a consolidated basis
for such period taken as a single accounting period, as determined in accordance
with GAAP.
"Consolidated Net Worth" shall mean, at any time, Net Worth of
the Borrower and its Subsidiaries determined on a consolidated basis in
accordance with GAAP after appropriate deduction for any minority interests in
Subsidiaries.
"Contingent Obligations" shall mean, as to any Person, without
duplication, any obligation of such Person guaranteeing or intended to guarantee
any Indebtedness, leases, dividends or other obligations ("primary obligations")
of any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor
(excluding any obligation or commitment of any Financial Services Subsidiary to
advance funds to any borrower pursuant to a lending contract entered into in the
ordinary course of business), (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary obligation
or (d) otherwise to assure or hold harmless the owner of such primary obligation
against loss in respect thereof; PROVIDED, HOWEVER, that the term Contingent
Obligation shall not include (x) endorsements of instruments for deposit or
collection in the ordinary course of business, (ii) indemnities granted in the
ordinary course of business and (iii) any insurance or reinsurance obligation of
any Regulated Insurance Company entered into in the ordinary course of the
insurance business of such Regulated Insurance Company. The amount of any
Contingent Obligation shall, subject to any contractual limitation stated in
such Contingent Obligation, be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Credit Documents" shall mean this Agreement, the Notes and the
Pledge Agreement and all other documents or instruments required to be delivered
hereunder or thereunder and all other documents or instruments required to be
delivered hereunder or thereunder.
54
"Credit Rating" shall mean the Xxxxx'x Credit Rating and the S&P
Credit Rating.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Effective Date" shall have the meaning provided in Section 11.10.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time. Section references to ERISA are to ERISA, as
in effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section
3(9) of ERISA) which, from and after the Effective Date, together with the
Borrower, or any Subsidiary of the Borrower, would be deemed to be a member of
the same "controlled group" within the meaning of Section 414(b), (c), (m) and
(o) of the Code.
"ESOP Loan" shall mean any indebtedness of a third party incurred
in connection with an employee stock ownership plan and guaranteed by the
Borrower.
"Eurodollar Loans" shall mean each Loan bearing interest at the
rates provided in Section 1.09(b).
"Eurodollar Rate" shall mean with respect to each Interest
Period, (i) the arithmetic average (rounded to the nearest 1/100 of 1%) of the
offered quotations to first-class banks in the interbank Eurodollar market by
each Reference Bank for dollar deposits of amounts in same day funds comparable
to the outstanding principal amount of the Eurodollar Loan of such Reference
Bank for which an interest rate is then being determined (or in the case of a
Competitive Bid Loan that is a Spread Borrowing priced by reference to the
Eurodollar Rate, the arithmetic average (rounded to the nearest 1/100 of 1%) of
the offered rates for deposits in U.S. dollars for the applicable Interest
Period (or the period closest to such applicable Interest Period) which appear
on the Telerate Page 3750, British Bankers Association Interest Settlement Rates
(or if such Telerate Page is unavailable, the comparable page on the Reuters
Screen LIBO Page)) with maturities comparable to the Interest Period, determined
as of 10:00 A.M. (New York time) on the date which is two Business Days prior to
the commencement of such Interest Period, divided (and rounded upward to the
next whole multiple of 1/16 of 1%) by (ii) a percentage equal to 100% minus the
then stated maximum rate of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or other reserves)
applicable to any member bank of the Federal Reserve System in respect of
Eurocurrency liabilities as defined in Regulation D (or any successor category
of liabilities under Regulation D); PROVIDED that if one or more of the
Reference Banks fails to provide the Agent with its aforesaid rate, then the
Eurodollar
55
Rate shall be determined based on the rate or rates provided to the Agent by the
other Reference Bank or Banks.
"Event of Default" shall have the meaning provided in Section 8.
"Existing Credit Agreements" shall mean and include (i) the
Amended and Restated Credit Agreement, dated as of August 24, 1995, by and among
the Borrower, various lending institutions and The Chase Manhattan Bank, as
Agent and (ii) the [Loan Agreement], dated as of ____________, between
Industrial and the Seller, in each case, as in effect on the Effective Date.
"Facility Fee" shall have the meaning provided in Section 2.01.
"FCIG" shall mean Fremont Compensation Insurance Group, Inc. a
Delaware corporation.
"FCMF" shall mean FGC Commercial Mortgage Finance, a California
corporation.
"Federal Funds Effective Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to
in, Section 2.01.
"FFC" shall mean Fremont Financial Corporation, a California
corporation.
"FGCC" shall mean Fremont General Credit Corporation, a
California corporation which is a direct Wholly-Owned Subsidiary of the
Borrower.
"FIC" shall mean Fremont Indemnity Company, a property and
casualty insurance company organized under the laws of California.
"FIC Combined Surplus" shall mean, at any time, the combined
Policyholder Surplus of FIC and its Subsidiaries at such time.
"FIL" shall mean Fremont Investment and Loan, a California
corporation.
56
"Final Maturity Date" shall mean August 1, 2002.
"Financial Services Non-Thrift Subsidiaries" shall mean all
Financial Services Subsidiaries other than Thrift Subsidiaries.
"Financial Services Subsidiaries" shall mean and include (i) FGCC
and its Subsidiaries, (ii) any Securitization Subsidiary that is not otherwise
included in clause (i) above, (iii) any Thrift Subsidiary that is not otherwise
included in clause (i) above and (iv) all other Subsidiaries of the Borrower,
whether in existence on the Effective Date or created or acquired thereafter;
but in any event excluding the Insurance Subsidiaries.
"FRC" shall mean Fremont Reinsurance Company, a California
corporation.
"GAAP" shall mean generally accepted accounting principles in the
United States of America; it being understood and agreed that determinations in
accordance with GAAP for purposes of Section 7, including defined terms as used
therein, are subject (to the extent provided therein) to Section 11.07(a).
"Indebtedness" of any Person shall mean, without duplication, (i)
all indebtedness of such Person for borrowed money, (ii) the deferred purchase
price of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such Indebtedness has been assumed, PROVIDED that if such Indebtedness is
not assumed, the amount of such Indebtedness shall be deemed for purposes hereof
to be the lesser of the principal amount of such Indebtedness and the fair
market value of the property securing such Indebtedness, (v) all Capitalized
Lease Obligations of such Person, (vi) all obligations of such Person to pay a
specified purchase price for goods or services whether or not delivered or
accepted, I.E., take-or-pay and similar obligations, (vii) all obligations of
such Person under Interest Rate Protection Agreements or Other Hedging
Agreements, (viii) all Contingent Obligations of such Person and (ix) any
obligation of the type referred to in any of clauses (i)-(viii) above of any
general partnership of which such Person is the or a general partner (but
excluding any general partnership the general partners of which include the
Borrower or any of its Subsidiaries and Xxxxxxx Xxxxx & Co. and the business of
which shall be to hold and administer loans acquired in connection with loan
portfolio purchases; PROVIDED that Indebtedness shall not include trade payables
(including reinsurance payables), daylight overdrafts, open accounts, accrued
expenses, indemnities, and insurance and reinsurance obligations of Regulated
Insurance Companies, in each case arising in the ordinary course of business.
57
"Industrial" shall mean Industrial Indemnity Holdings, Inc., a
Delaware corporation.
"Initial Borrowing Date" shall mean the date upon which the
initial Borrowing of Loans or Competitive Bid Loans occurs.
"Insurance Business" shall mean one or more aspects of the
business of selling, issuing or underwriting insurance or reinsurance.
"Insurance Subsidiaries" shall mean (i) FCIG, (ii) each of FCIG's
Subsidiaries (whether in existence on the Effective Date or created or acquired
thereafter) and (iii) each other Subsidiary of the Borrower created or acquired
after the Effective Date that engages in property and casualty insurance
operations, workers compensation insurance operations or the activities of which
are limited to holding the stock or other securities of another Subsidiary or
Subsidiaries engaged in property and casualty insurance operations and/or
workers compensation insurance.
"Insured Depository Subsidiary" shall mean any Subsidiary of the
Borrower that is an "insured depository institution" within the meaning of 12
U.S.C. ss. 1813(c)(2).
"Interest Period" shall mean (x) with respect to any Eurodollar
Loan, the interest period applicable thereto, as determined pursuant to Section
1.10 and (y) with respect to any Competitive Bid Loan, the period beginning on
the date of incurrence thereof and ending on the stated maturity thereof.
"Interest Rate Basis" shall mean the Eurodollar Rate and/or such
other basis for determining an interest rate as the Borrower and the Agent may
agree upon from time to time.
"Interest Rate Protection Agreement" shall mean any interest rate
swap agreement, interest rate cap agreement, interest collar agreement, interest
rate hedging agreement or other similar agreement or arrangement.
"Investment" shall mean, for any Person: (a) the acquisition
(whether for cash, property, services or securities or otherwise) of capital
stock, bonds, notes, debentures, partnership or other ownership interests or
other securities of any other Person or any agreement to make any such
acquisition (including, without limitation, any "short sale" or any sale of any
securities at a time when such securities are not owned by the Person entering
into such short sale); (b) the making of any deposit with, or advance, loan or
other extension of credit to, any other Person (including the purchase of
property from another Person subject to an understanding or agreement,
contingent or otherwise, to resell such property to such Person) and (without
duplication) the entering into of any commitment to deposit funds with, advance
or lend funds to or otherwise extend credit to such Person; (c) the entering
into of any
58
Contingent Obligation with respect to Indebtedness or other liability of any
other Person; or (d) the entering into by such Person of any interest rate
protection agreement.
"Investment Grade Securities" shall mean (i) any securities (as
defined in Section 8-102(1)(c) of the UCC as in effect in the State of New York
on the Effective Date) that are rated BBB- or higher by S&P, Baa3 or higher by
Moody's, Class (2) or higher by NAIC or the equivalent of such rating by S&P,
Moody's or NAIC, or if none of S&P, Moody's and NAIC shall then exist, the
equivalent of such rating by any other nationally recognized securities rating
agency or (ii) any fund investing exclusively in investments of the type
described in clause (i) which fund may also hold immaterial amounts of cash
pending investment and/or distribution.
"Investors Bancor" shall mean Investors Bancor, a California
corporation.
"Legal Requirements" shall mean all applicable laws, rules,
orders and regulations made by any governmental body or regulatory authority
(including, without limitation, any Applicable Insurance Regulatory Authority)
having jurisdiction over the Borrower or a Subsidiary of the Borrower.
"Liabilities to Policyholder Surplus Ratio" shall mean, at any
time, the ratio of (a) consolidated liabilities (determined on a consolidated
basis without duplication in accordance with SAP) of FIC and its consolidated
Subsidiaries at such time to (b) the consolidated Policyholder Surplus of FIC
and its consolidated Subsidiaries at such time.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
"Liquid Yield Option Notes" shall mean the Borrower's $373,750,000
Aggregate Principal Amount at Maturity Liquid Yield Option(TM) Notes due 2013
(Zero Coupon Subordinated) Effective October 4, 1993.
"Loan" and "Loans" shall have the meaning provided in Section
1.01(a).
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Insurance Subsidiary" shall mean any Insurance
Subsidiary whose Policyholder Surplus constitutes 10% or more of the combined
Policyholder Surplus of FCIG.
"Moody's" shall mean Xxxxx'x Investors Service, Inc. and its
successors.
59
"Moody's Credit Rating" shall mean the rating level (it being
understood that a rating level shall include numerical modifiers and (+) and (-)
modifiers) assigned by Moody's to the senior unsecured long-term debt of the
Borrower.
"NAIC" shall mean the National Association of Insurance
Commissioners or any successor organization thereto.
"NAIC Tests" shall mean the ratios and other financial
measurements developed by the NAIC under its Insurance Regulatory Information
System, as initially in effect with respect to property and casualty insurance
companies and as thereafter modified, supplemented, replaced or eliminated from
time to time.
"Net Premiums Written" shall mean, for any period, determined in
accordance with SAP, the aggregate amount of premiums written by all
Subsidiaries of FCIG which are Regulated Insurance Companies (determined on a
combined basis) during such period.
"Net Worth" shall mean, as to any Person, the sum of its capital
stock, capital in excess of par or stated value of shares of its capital stock,
retained earnings and any other account which, in accordance with GAAP,
constitutes stockholders equity, but excluding (i) any treasury stock and (ii)
the effect, if any, of unrealized capital gains and losses.
"Non-Consensual Permitted Lien" shall mean Liens permitted by
Section 7.03(a) or (e), PROVIDED that such Liens have not specifically attached
to the Collateral by the filing of a notice of lien or otherwise.
"Non-Investment Grade Securities" shall mean any securities (as
defined in Section 8-102(1)(c) of the UCC as in effect in the State of New York
on the Effective Date) (i) that are not rated by any of S&P, Moody's or the NAIC
or (ii) that are not Investment Grade Securities.
"Note" and "Notes" shall have the meaning provided in Section
1.06(a).
"Notice of Borrowing" shall have the meaning provided in Section
1.03.
"Notice of Competitive Bid Borrowing" shall have the meaning
provided in Section 1.04.
"Notice of Conversion" shall have the meaning provided in Section
1.07.
"Notice Office" shall mean the office of the Agent at [Four Chase
Xxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000], or such other office as the Agent
may designate to the Borrower and the Banks from time to time.
60
"Obligations" shall mean all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time existing,
owing to the Agent, the Collateral Agent or any Bank pursuant to the terms of
this Agreement or any other Credit Document.
"Other Hedging Agreement" shall mean any foreign exchange
contracts, currency swap agreements or other similar agreements or arrangements
designed to protect against the fluctuations in currency values.
"Payment Office" shall mean the office of the Agent at Xxx Xxxxx
Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other office as the Agent may
designate to the Borrower and the Banks from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" shall mean for each Bank on each date of
determination a fraction the numerator of which is equal to the Commitment of
such Bank on such date and the denominator of which is equal to the Total
Commitment on such date, PROVIDED that if the Percentage of any Bank is to be
determined after the Total Commitment has been terminated, then the Percentage
for each Bank shall be a fraction the numerator of which is equal to the
aggregate principal amount of Loans of such Bank outstanding on such date and
the denominator of which is equal to the aggregate principal amount of all Loans
outstanding on such date.
"Permitted Acquisition" shall have the meaning provided in Section
7.02(c).
"Permitted Acquisition Debt" shall mean Indebtedness of any
Insurance Subsidiary acquired by the Borrower after the Effective Date, PROVIDED
that (i) such Indebtedness was in existence prior to such acquisition and was
not created in connection with, or in contemplation of, such acquisition and
(ii) neither the Borrower nor any of its other Subsidiaries guaranties or is
otherwise obligated in any manner in respect of such Indebtedness.
"Permitted Subordinated Debt" shall mean Indebtedness of the
Borrower expressly subordinated to the Obligations, which (i) shall contain no
financial maintenance covenants or cross-default provisions (it being understood
and agreed that a cross-acceleration provision shall be permitted), (ii) shall
have no maturities, scheduled repayments or sinking fund requirements prior to
one year following the Final Maturity Date and (iii) shall contain terms and
conditions relating to the interest rate applicable thereto, covenants,
defaults, remedies and subordination provisions, and shall be issued pursuant to
documentation, which shall be in form and substance satisfactory to the Required
Banks.
61
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan as
defined in Section 4001 of ERISA, which is contributed to pursuant to collective
bargaining requirements or maintained by, or at any time during the five
calendar years preceding the date of this Agreement was contributed to pursuant
to collective bargaining requirements or maintained by, the Borrower, any
Subsidiary or an ERISA Affiliate.
"Pledge Agreement" shall have the meaning provided in Section 4.09.
"Pledged Stock" shall mean all the Pledged Stock as defined in the
Pledge Agreement.
"Policyholder Surplus" of any Person shall mean, at any time, the
consolidated policyholders' surplus (determined on a consolidated basis without
duplication in accordance with SAP) of such Person and its consolidated
Subsidiaries at such time (but excluding therefrom the effect of any unrealized
gains and losses from the marketable securities portfolio of such Person and its
consolidated Subsidiaries).
"Prescribed Forms" shall mean such duly executed form(s) or
statement(s), and in such number of copies, which may, from time to time, be
prescribed by law and which, pursuant to applicable provisions of (a) an income
tax treaty between the United States and the country of residence of the Bank
providing the form(s) or statement(s), (b) the Code, or (c) any applicable rule
or regulation under the Code, permit the Borrower to make payments hereunder for
the account of such Bank free of deduction or withholding of income or similar
taxes.
"Prime Lending Rate" shall mean the rate which the Agent
announces from time to time as its prime commercial lending rate, the Prime
Lending Rate to change when and as such prime commercial lending rate changes.
The Prime Lending Rate is a reference rate and does not necessarily represent
the lowest or best rate actually charged to any customer. The Agent may make
commercial loans or other loans at rates of interest at, above or below the
Prime Lending Rate.
"Projections" shall have the meaning provided in Section 5.10(e).
"Rating Agencies" shall mean each of Moody's and S&P.
"Reference Banks" shall mean Chase, Fleet Bank, National
Association and Xxxxx Fargo Bank N.A.
"Register" shall have the meaning provided in Section 1.06(d).
62
"Regulated Insurance Company" shall mean any Subsidiary of the
Borrower, whether now owned or hereafter acquired, that is authorized or
admitted to carry on or transact Insurance Business in any jurisdiction and is
regulated by the insurance department or similar regulatory authority of such
jurisdiction.
"Regulation D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof establishing margin requirements.
"Reply Date" shall have the meaning provided in Section 1.04(b).
"Reportable Event" shall mean an event described in Section
4043(b) of ERISA with respect to a Plan as to which the 30-day notice
requirement has not been waived by the PBGC.
"Required Banks" shall mean Banks having Commitments which
constitute more than 50% of the Total Commitment, PROVIDED that at any time
after the Total Commitment has been terminated, the "Required Banks" shall mean
Banks whose Loans and Competitive Bid Loans constitute more than 50% of the
aggregate principal amount of Loans and Competitive Bid Loans outstanding at
such time.
"Reuters Screen" shall mean, when used in connection with any
designated page in determining the applicable Eurodollar Rate for an Interest
Period for a Competitive Bid Borrowing that is a Spread Borrowing priced by
reference to the Eurodollar Rate, the display page so designated on the Reuters
Monitor Money Rates Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates).
"S&P" shall mean Standard & Poor's Rating Group. a division of
the XxXxxx-Xxxx Industries, Inc., and its successors.
"S&P Credit Rating" shall mean the rating level (it being
understood that a rating level shall include numerical modifiers and (+) and (-)
modifiers) assigned by S&P to the senior unsecured long-term debt of the
Borrower.
"SAP" shall mean, with respect to any Regulated Insurance
Company, the accounting procedures and practices prescribed or permitted by the
Applicable Insurance Regulatory Authority of the state in which such Regulated
Insurance Company is domiciled; it being understood and agreed that
determinations in accordance with SAP for purposes of Section 7, including
defined terms as used therein, are subject (to the extent provided therein) to
Section 11.07(a).
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"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"SEC Regulation D" shall mean Regulation D as promulgated under
the Securities Act of 1933, as amended, as the same may be in effect from time
to time.
"Securitization Subsidiaries" shall mean (i) FFC, (ii) each of
FFC's Subsidiaries (whether in existence on the Effective Date or created or
acquired thereafter), (iii) each other Subsidiary of the Borrower created or
acquired after the Effective Date that engages in asset securitization
operations or the activities of which are limited to holding the stock or
securities of another Subsidiary or Subsidiaries engaged in asset securitization
operations and (iv) any other Financial Services Subsidiaries which enters into
asset securitization transactions after the Effective Date.
"Seller" shall mean Talegen Holdings, Inc.
"Spread" shall mean a percentage per annum in excess of, or less
than, an Interest Rate Basis.
"Spread Borrowing" shall mean a Competitive Bid Borrowing with
respect to which the Borrower has requested the Banks to make Competitive Bid
Loans at a Spread over or under a specified Interest Rate Basis.
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity or voting interest at the time. Unless
otherwise expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Taxes" shall have the meaning provided in Section 3.04.
"Telerate Page" shall mean, when used in connection with any
designated page number, the display page so designated on the Dow Xxxxx Telerate
Service (or such other page as may replace that page on that service, or such
other service as may be nominated as the information vendor, for the purpose of
displaying rates or prices comparable to the Eurodollar Rate).
"Thrift Subsidiaries" shall mean (i) Investors Bancor, (ii) each
of Investors Bancor's Subsidiaries (whether in existence on the Effective Date
or created or acquired thereafter, and in any event including FIL and FCMF) and
(iii) each other
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Subsidiary of the Borrower created or acquired after the Effective Date that
engages in thrift operations or the activities of which are limited to holding
the stock or securities of another Subsidiary or Subsidiaries engaged in thrift
operations.
"TOPRS" shall mean the trust originated preferred securities
issued by the TOPRS Subsidiary, the proceeds of which were loaned to the
Borrower.
"TOPRS Debt" shall mean that certain indebtedness of the Borrower
owed to the TOPRS Subsidiary and incurred in connection with the issuance of the
TOPRS by the TOPRS Subsidiary.
"TOPRS Subsidiary" shall mean that Wholly-Owned Subsidiary of the
Borrower which issued the TOPRS and loaned the proceeds received therefrom to
the Borrower.
"Total Capitalization" shall mean, at any time, the sum of Total
Funded Indebtedness plus Consolidated Net Worth (which shall include solely for
this purpose the TOPRS Debt) at such time.
"Total Commitment" shall mean the sum of the Commitments of each
Bank.
"Total Funded Indebtedness" shall mean, at any time, Total
Indebtedness at such time less any portion of such Total Indebtedness
constituting Contingent Obligations.
"Total Indebtedness" shall mean, at any time, all Indebtedness
(including, without limitation, the Borrower's Liquid Yield Option Notes, but
excluding the TOPRS Debt and any ESOP Loan) of the Borrower at such time.
"Total Unutilized Commitment" shall mean at any time for the
determination thereof, the Total Commitment less the aggregate outstanding
principal amount of all Loans at such time.
"Transaction" shall mean, collectively, (i) the Acquisition, (ii)
the refinancing of the Existing Credit Agreements, (iii) the entering into of
the Credit Documents and the incurrence of Loans on the Initial Borrowing Date
and (iv) the payment of all fees and expenses in connection with the foregoing.
"Transaction Documents" shall mean the Acquisition Documents, the
Credit Documents and all other documents effectuating the Transaction or
executed in connection therewith.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, I.E., a Base Rate Loan or Eurodollar Loan.
65
"UCC" shall mean the Uniform Commercial Code.
"Unfunded Current Liability" of any Plan shall mean the amount,
if any, by which the present value of the accrued benefits under such Plan as of
the close of its most recent plan year exceeds the fair market value of the
assets allocable thereto, determined in accordance with Section 412 of the Code.
"United States" and "U.S." shall each mean the United States
of America.
"Wholly-Owned Subsidiary" of any Person shall mean any Subsidiary
of such Person to the extent all of the capital stock or other ownership
interests in such Subsidiary, other than directors' or nominees' qualifying
shares, is owned directly or indirectly by such Person.
"Written" or "in writing" shall mean any form of written
communication or a communication by means of telex, facsimile device, telegraph
or cable.
SECTION 10. THE AGENT
10.01 APPOINTMENT. Subject to the provisions of Section 10.09,
each Bank hereby irrevocably designates and appoints Chase as Agent of such Bank
(such term to include, for purposes of this Section 10, Chase acting as
Collateral Agent) to act as specified herein and in the other Credit Documents
and each such Bank hereby irrevocably authorizes Chase as the Agent for such
Bank to take such action on its behalf under the provisions of this Agreement
and the other Credit Documents and to exercise such powers and perform such
duties as are expressly delegated to the Agent by the terms of this Agreement
and the other Credit Documents, together with such other powers as are
reasonably incidental thereto. The Agent agrees to act as such upon the express
conditions contained in this Section 10. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in the other Credit
Documents, or any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Agent. The provisions
of this Section 10 are solely for the benefit of the Agent and the Banks, and
the Borrower shall have no rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement,
the Agent shall act solely as agent of the Banks and the Agent shall not assume,
nor shall it be deemed to have assumed, any obligation or relationship of agency
or trust with or for the Borrower or any of its Subsidiaries.
10.02 DELEGATION OF DUTIES. The Agent may execute any of its
duties under this Agreement or any other Credit Document by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of
66
any agents or attorneys-in-fact selected by it with reasonable care except to
the extent otherwise required by Section 10.03.
10.03 EXCULPATORY PROVISIONS. Neither the Agent nor any of its
respective officers, directors, employees, representatives, agents,
attorneys-in-fact or affiliates shall be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
this Agreement (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Banks for any
recitals, statements, representations or warranties made by the Borrower, any
Subsidiary or any of their respective officers contained in this Agreement, any
other Credit Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Credit Document or for any failure of the
Borrower or any Subsidiary or any of their respective officers to perform its
obligations hereunder or thereunder. The Agent shall not be under any obligation
to any Bank to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement, or to
inspect the properties, books or records of the Borrower or any Subsidiary. The
Agent shall not be responsible to any Bank for the effectiveness (other than its
own execution), genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any Credit Document or for any representations,
warranties, recitals or statements made herein or therein or made in any written
or oral statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Agent to the Banks or by or on behalf of the Borrower
to the Agent or any Bank or be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained herein or therein or as to the use of the proceeds of
the Loans or Competitive Bid Loans or of the existence or possible existence of
any Default or Event of Default.
10.04 RELIANCE BY AGENT. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, facsimile, telex
or teletype message, statement, order or other document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take or continue to take any action under
this Agreement or any other Credit Document unless it shall first receive such
advice or concurrence of the Required Banks as it deems appropriate or it shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Credit Documents in accordance with a request of the Required Banks, (or
to the extent specifically provided in Section 11.11, all the
67
Banks), and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Banks.
10.05 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Bank or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof to the Banks.
The Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Banks, PROVIDED that,
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Banks.
10.06 NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank expressly
acknowledges that neither the Agent nor any of its respective officers,
directors, employees, agents, representatives, attorneys-in-fact or affiliates
has made any representations or warranties to it and that no act by the Agent
hereinafter taken, including any review of the affairs of the Borrower or any
Subsidiary, shall be deemed to constitute any representation or warranty by the
Agent to any Bank. Each Bank represents to the Agent that it has, independently
and without reliance upon the Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the businesses, assets, operations, property,
financial and other conditions, prospects and creditworthiness of the Borrower
and its Subsidiaries and made its own decision to make its Loans and its
Competitive Bid Loans hereunder and enter into this Agreement. Each Bank also
represents that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, and to make
such investigation as it deems necessary to inform itself as to the business,
assets, operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower and its Subsidiaries. Except for notices,
reports and other documents expressly required to be furnished to the Banks by
the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the businesses,
operations, assets, property, financial and other conditions, prospects or
creditworthiness of the Borrower or any Subsidiary which may come into the
possession of the Agent or any of its officers, directors, employees, agents,
representatives, attorneys-in-fact or affiliates.
10.07 INDEMNIFICATION. The Banks agree to indemnify the Agent in
its capacity as such ratably according to their respective "percentages" as used
in determining the Required Banks at such time from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, reasonable
68
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the
Obligations) be imposed on, incurred by or asserted against the Agent in its
capacity as such in any way relating to or arising out of this Agreement or any
other Credit Document, or any documents contemplated by or referred to herein or
the transactions contemplated hereby or any action taken or omitted to be taken
by the Agent under or in connection with any of the foregoing, but only to the
extent that any of the foregoing is not paid by the Borrower or any of its
Subsidiaries, PROVIDED that no Bank shall be liable to the Agent for the payment
of any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
gross negligence or willful misconduct of the Agent. If any indemnity furnished
to the Agent for any purpose shall, in the opinion of the Agent be insufficient
or become impaired, the Agent may call for additional indemnity and cease, or
not commence, to do the acts indemnified against until such additional indemnity
is furnished. The agreements in this Section 10.07 shall survive the payment of
all Obligations.
10.08 AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower and its Affiliates as though the Agent were
not the Agent hereunder. With respect to the Loans and Competitive Bid Loans
made by it and all Obligations owing to it, the Agent shall have the same rights
and powers under this Agreement as any Bank and may exercise the same as though
it were not the Agent and the terms "Bank" and "Banks" shall include the Agent
in its individual capacity.
10.09 RESIGNATION OF THE AGENT; SUCCESSOR AGENT. The Agent may
resign as the Agent upon 20 days' notice to the Banks. Upon the resignation of
the Agent, the Required Banks shall appoint from among the Banks a successor
Agent for the Banks subject to prior approval by the Borrower, whereupon such
successor agent shall succeed to the rights, powers and duties of the Agent, and
the term "Agent" shall include such successor agent effective upon its
appointment, and the resigning Agent's rights, powers and duties as the Agent
shall be terminated, without any other or further act or deed on the part of
such former Agent or any of the parties to this Agreement. After the resignation
of the Agent hereunder, the provisions of this Section 10 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Agent under this Agreement.
SECTION 11. MISCELLANEOUS
11.01 PAYMENT OF EXPENSES, ETC. The Borrower agrees to: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Agent in connection with the
negotiation, preparation, execution and delivery of the Credit Documents and the
documents and instruments referred to therein and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees and
disbursements of White & Case) and of the Agent and each of the Banks in
connection with the enforcement of the Credit Docu-
69
ments and the documents and instruments referred to therein (including, without
limitation, the reasonable fees and disbursements of counsel for the Agent and
for each of the Banks); (ii) pay and hold each of the Banks harmless from and
against any and all present and future stamp and other similar taxes with
respect to the foregoing matters and save each of the Banks harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission (other than to the extent attributable to such Bank) to pay such taxes;
and (iii) indemnify the Agent and each Bank, and their respective officers,
directors, employees, representatives and agents from and hold each of them
harmless against any and all losses, liabilities, claims, damages or expenses
incurred by any of them as a result of, or arising out of, or in any way related
to, or by reason of, any investigation, litigation or other proceeding (whether
or not the Agent or any Bank is a party thereto) related to the entering into
and/or performance of any Credit Document or the use of the proceeds of any
Loans or Competitive Bid Loans hereunder or the consummation of any other
transactions contemplated in any Credit Document, including, without limitation,
the reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding (but excluding any such
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
11.02 RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, each Bank is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Borrower or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by such Bank (including, without limitation, by branches
and agencies of such Bank wherever located) to or for the credit or the account
of the Borrower against and on account of the Obligations and liabilities of the
Borrower to such Bank under this Agreement or under any of the other Credit
Documents, including, without limitation, all interests in Obligations of the
Borrower purchased by such Bank pursuant to Section 11.06(b), and all other
claims of any nature or description arising out of or connected with this
Agreement or any other Credit Document, which are then due and payable
irrespective of whether or not such Bank shall have made any demand hereunder.
11. 03 NOTICES. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to the Borrower, at
the address specified opposite its signature below; if to any Bank, at its
address specified for such Bank on Annex II hereto; or, at such other address as
shall be designated by any party in a written notice to the other parties
hereto. All such notices and communications shall be mailed, telegraphed,
telexed, telecopied, cabled or sent by overnight courier and shall be effective
when received.
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11.04 BENEFIT OF AGREEMENT. (a) This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; PROVIDED that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Banks. Each Bank may at any time grant participations in any of
its rights hereunder or under any of its Notes to another financial institution;
PROVIDED that in the case of any such participation, the participant shall not
have any rights under this Agreement or any of the other Credit Documents (the
participant's rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Bank had not sold such participation, except that
the participant shall be entitled to receive the additional amounts under
Sections 1.11, 1.12 and 3.04 to, and only to, the extent that such Bank would be
entitled to such benefits if the participation had not been entered into or
sold; and PROVIDED FURTHER that no Bank shall transfer, grant or assign any
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Loan or Competitive Bid Loan or Note in which such participant
is participating or reduce the rate or extend the time of payment of interest
thereon (except in connection with a waiver of the applicability of any
post-default increase in interest rates) or Fees, or reduce the principal amount
thereof, or increase the Commitment in which such participant is participating
over the amount thereof then in effect (it being understood that a waiver of any
Default or Event of Default or of a mandatory reduction in the Total Commitment
or of a mandatory prepayment shall not constitute a change in the terms of any
Commitment and that an increase in any Commitment shall be permitted without the
consent of any participant therein if such participant's participation is not
increased as a result thereof), (ii) release all or substantially all of the
Collateral (except as expressly provided in the Credit Documents) or (iii)
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement or any other Credit Document except in
accordance with the terms hereof and thereof.
(b) Notwithstanding the foregoing, any Bank may assign all or a
portion of its Commitment, and its rights and obligations hereunder, to one or
more commercial banks or other financial institutions (including one or more
Banks); PROVIDED, HOWEVER, that no Bank may effect such an assignment without
the prior written consent of the Borrower and the Agent, neither of which
consents will be unreasonably withheld. No assignment of less than all of a
Bank's Commitment and its rights and obligations hereunder pursuant to the
immediately preceding sentence shall, to the extent such transaction represents
an assignment to an institution other than one or more Banks hereunder, be in an
aggregate amount less than the minimum of $10,000,000. Each assignment shall be
of a constant, and not a varying percentage, of all of the assigning Bank's
rights and obligations under this Agreement. If any Bank so sells or assigns all
or a part of its Commitment and its rights hereunder or under the Notes, any
reference in this Agreement or the Notes to such assigning Bank shall thereafter
refer to such
71
Bank and to the respective assignee to the extent of their respective interests
and the respective assignee shall have, to the extent of such assignment (unless
otherwise provided therein), the same rights and benefits as it would if it were
such assigning Bank. Each assignment pursuant to this Section 11.04(b) shall be
effected by the assigning Bank and the assignee Bank executing an Assignment and
Assumption Agreement substantially in the form of Exhibit F (appropriately
completed). At the time of any such assignment, (i) Annex I shall be deemed to
be amended to reflect the Commitment of the respective assignee (which shall
result in a direct reduction to the Commitment of the assigning Bank) and of the
other Banks, (ii) if any such assignment occurs after the Effective Date, at the
request of the assignor or the assignee the Borrower will issue new Notes to the
respective assignee and to the assigning Bank in conformity with the
requirements of Section 1.06 and (iii) the Agent shall receive from the
assigning Bank and/or the assignee Bank or financial institution at the time of
each assignment the payment of a nonrefundable assignment fee of $3,000. Each
Bank and the Borrower agrees to execute such documents (including, without
limitation, amendments to this Agreement and the other Credit Documents) as
shall be necessary to effect the foregoing at the expense of the assignee Bank.
Promptly following any assignment pursuant to this Section 11.04(b), the
assigning Bank shall promptly notify the Borrower and the Agent thereof. Nothing
in this Section 11.04 shall prevent or prohibit any Bank from pledging its Loans
or Competitive Bid Loans or Notes hereunder to a Federal Reserve Bank in support
of borrowings made by such Bank from such Federal Reserve Bank.
11.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
the Borrower and the Agent or any Bank shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies herein expressly provided are cumulative and
not exclusive of any rights or remedies which the Agent or any Bank would
otherwise have. No notice to or demand on the Borrower in any case shall entitle
the Borrower to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent or the Banks to
any other or further action in any circumstances without notice or demand.
11.06 PAYMENTS PRO RATA. (a) The Agent agrees that promptly after
its receipt of each payment from or on behalf of the Borrower in respect of any
Obligations of the Borrower, it shall distribute such payment to the Banks
(other than any Bank that has consented in writing to waive its PRO RATA share
of such payment) PRO RATA based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security, by
the exercise
72
of the right of setoff or banker's lien, by counterclaim or cross action, by the
enforcement of any right under the Credit Documents, or otherwise) which is
applicable to the payment of the principal of, or interest on, the Loans or
Competitive Bid Loans or Fees, of a sum which with respect to the related sum or
sums received by other Banks is in a greater proportion than the total of such
Obligation then owed and due to such Bank bears to the total of such Obligation
then owed and due to all of the Banks immediately prior to such receipt, then
such Bank receiving such excess payment shall purchase for cash without recourse
or warranty from the other Banks an interest in the Obligations of the Borrower
to such Banks in such amount as shall result in a proportional participation by
all of the Banks in such amount, PROVIDED that if all or any portion of such
excess amount is thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
11.07 CALCULATIONS; COMPUTATIONS. (a) The financial statements to
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP or SAP, as the case may be, consistently applied throughout
the periods involved (except as set forth in the notes thereto or as otherwise
disclosed in writing by the Borrower to the Banks). In addition, except as
otherwise specifically provided herein, all computations determining compliance
with Section 7, including definitions used therein, shall utilize accounting
principles and policies in effect from time to time; PROVIDED that if any such
accounting principle or policy (whether GAAP or SAP or both) shall change after
the Effective Date, the Borrower shall give prompt notice thereof to the Agent
and each of the Banks and if within 30 days following such notice the Borrower,
the Agent or the Required Banks shall elect by giving written notice of such
election to the other parties hereto, such computations shall not give effect to
such change unless and until this Agreement shall be amended pursuant to Section
11.11 to give effect to such change.
(b) All computations of interest and Facility Fees hereunder
shall be made on the actual number of days elapsed over a year of 360 days.
11.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE. (a) THIS
AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Agreement or any other Credit Document may be brought in
the courts of the State of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Agreement, the
Borrower hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
Borrower hereby irrevocably designates, appoints and empowers CT Corporation
System, with offices on the date hereof at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000 as its designee, appointee and agent to receive, accept and acknowledge
for and on its behalf, and in respect of its
73
property, service of any and all legal process, summons, notices and documents
which may be served in any such action or proceeding. The Agent agrees to use
reasonable good faith efforts to mail, by registered or certified mail, to the
Borrower, at its address set forth opposite its signature below, copies of any
correspondence mailed or delivered to CT Corporation System in connection with
the immediately preceding sentence; PROVIDED that no failure of the Borrower to
receive, for any reason, copies of such correspondence shall in any way affect
the effectiveness of the delivery of any legal process, summons, notice or
documents delivered to CT Corporation System. If for any reason such designee,
appointee and agent shall cease to be available to act as such, the Borrower
agrees to designate a new designee, appointee and agent in New York City on the
terms and for the purposes of this provision satisfactory to the Agent. The
Borrower further irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the Borrower
at its address for notices pursuant to Section 11.03, such service to become
effective 30 days after such mailing. Nothing herein shall affect the right of
the Agent or any Bank to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the Borrower in any
other jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid actions
or proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
11.09 COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Agent.
11.10 EFFECTIVENESS. This Agreement shall become effective on the
date (the "Effective Date") on which the Borrower, the Agent and each of the
Banks shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile device)
the same to the Agent at its Notice Office or, in the case of the Banks, shall
have given to the Agent telephonic (confirmed in writing), written or telex
notice (actually received) at such office that the same has been signed and
mailed to it. The Agent will give the Borrower and each Bank prompt written
notice of the occurrence of the Effective Date.
11.11 AMENDMENT OR WAIVER. Neither this Agreement nor any other
Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed
74
by the Borrower and the Required Banks, PROVIDED that no such change, waiver,
discharge or termination shall, without the consent of each Bank affected
thereby, (i) extend any date fixed for any payment of principal of any Loan or
Competitive Bid Loan or Note or reduce the rate or extend the time of payment of
interest thereon or Fees or reduce the principal amount thereof, or increase the
Commitment of any Bank over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default shall not constitute
a change in the terms of any Commitment of any Bank), (ii) release any of the
Collateral (except as expressly provided in the Credit Documents), (iii) amend,
modify or waive any provision of this Section, (iv) reduce any percentage
specified in, or otherwise modify, the definition of Required Banks or any
provision of this Agreement specifying the number or percentage of Banks
required to take any action hereunder or (v) consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement or any other Credit Document. No provision of Section 10 or any other
term or provision relating to the rights or obligations of the Agent may be
amended without the consent of the Agent.
11.12 SURVIVAL. All indemnities set forth herein including,
without limitation, in Section 1.11, 1.12, 3.04, 10.07 or 11.01 shall survive
the execution and delivery of this Agreement and the making of the Loans and
Competitive Bid Loans, the repayment of the Obligations and the termination of
the Total Commitment.
11.13 DOMICILE OF LOANS. Subject to Section 11.04, each Bank may
transfer and carry its Loans and Competitive Bid Loans at, to or for the account
of any branch office, subsidiary or affiliate of such Bank, PROVIDED that the
Borrower shall not be responsible for costs arising under Section 1.11 or 3.04
resulting from any such transfer to the extent not otherwise applicable to such
Bank prior to such transfer.
11.14 CONFIDENTIALITY. Each Bank shall hold all non-public
information furnished by or on behalf of the Borrower in connection with such
Bank's evaluation of whether to become a Bank hereunder or obtained by such Bank
pursuant to the requirements of this Agreement, which has been identified as
such by the Borrower, in accordance with its customary procedure for handling
confidential information of this nature and in accordance with safe and sound
banking or lending practices and in any event may make disclosure reasonably
required by any bona fide actual or contemplated transferee or participant in
connection with an actual or contemplated transfer of any Loans or Competitive
Bid Loans or participation therein or as required or requested by any
governmental agency or representative thereof or pursuant to legal process or to
such Bank's attorneys or independent auditors or affiliates; PROVIDED that
unless specifically prohibited by applicable law or court order, each Bank shall
notify the Borrower of any request or requirement by any governmental agency or
representative thereof (other than any such request or requirement in connection
with an examination of the financial condition of such Bank by such governmental
agency) or pursuant to legal process for disclosure of any such non-public
information prior to disclosure of such information; and PROVIDED FURTHER, that
in no event shall any Bank be obligated or
75
required to return any materials furnished by the Borrower or any Subsidiary of
the Borrower.
11.15 WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
11.16 HEADINGS DESCRIPTIVE. The headings of the several sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
76
ADDRESS:
2020 Santa Xxxxxx Boulevard FREMONT GENERAL CORPORATION
Xxxxx Xxxxxx, XX 000000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000 By /S/ XXXXX X. XXXXXX
------------------------------------
Attn: Title: Executive Vice President
Treasurer and Chief Financial Officer
THE CHASE MANHATTAN BANK,
Individually and as Agent
By /S/ XXXXXXX XXXXXXXXX
-------------------------------------
Title: Vice President
CREDIT LYONNAIS SAN XXXXXXXXX
XXXXXX
By /S/ XXXXXX X. XXXXX
-------------------------------------
Title: Vice President & Manager
00
XXXXXXXX XXXX XX, XXX XXXX
BRANCH
By /S/ XXXXX X. XXXXXXX
------------------------------------
Title: Vice President
By /S/ XXXXXX X. XXXXXXX
------------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF
CHICAGO
By /S/ XXXXX X. XXXXXX
------------------------------------
Title: Assistant Vice President
XXXXX FARGO BANK N.A.
By /S/ XXXXX X. XXXXXXXXXXXXX
------------------------------------
Title: Vice President
By /S/ XXXXXX X. VYAMA
-------------------------------------
Title: Assistant Vice President
FIRST UNION NATIONAL BANK
By /S/ XXXX X. XXXXXXXXX
------------------------------------
Title: Senior Vice President
FLEET BANK, NATIONAL
ASSOCIATION
By /S/ XXXXX X. XXXXXXXX
------------------------------------
Title: Vice President
00
XXXXX XXXX XX XXXXXXXXXX, N.A.
By /S/ XXXXXXXX X. XXXXXXXXX
------------------------------------
Title: Vice President
DEUTSCHE BANK AG, New York and/or
Cayman Island Branches
By /S/ XXXXX XXXXXXXXXXX
------------------------------------
Title: Vice President
By /S/ XXXX X. XXXXXX
------------------------------------
Title: Vice President
BANK OF MONTREAL
By /S/ XXXXXXX X. XXXX
------------------------------------
Title: Director
THE BANK OF NEW YORK
By /S/ XXXXXXX X. XXXXXX
------------------------------------
Title: Assistant Vice President
THE BANK OF NOVA SCOTIA
By /S/ M. VAN OTTERLOU
------------------------------------
Title: Senior Relationship Manager
79
CIBC INC.
By /S/ XXXXXX X. XXXXXXX
------------------------------------
Title: Director, CIBC Wood Gundy
Securities Corp., as Agent
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By /S/ XXXXXXX X. XXXXXXXX
------------------------------------
Title: Senior Vice President &
Senior Manager
LASALLE NATIONAL BANK
By /S/ XXXXX X. XXXXX
------------------------------------
Title: First Vice President
SAKURA BANK LTD.
By /S/ XXXXX XXXX
------------------------------------
Title: Senior Vice President &
Assistant General Manager
THE SUMITOMO BANK, LIMITED
By /S/ XXXX XXXXX
------------------------------------
Title: Joint General Manager
00
XXXXXXXX XXXX, XXXXXXX
XXXXXXX, NATIONAL ASSOCIATION
By /S/ XXXXX X. XXXXXXX
------------------------------------
Title: Vice President
81
ANNEX I
LIST OF BANKS AND COMMITMENTS
NAME OF BANK COMMITMENT
------------ ------------
The Chase Manhattan Bank $ 25,000,000
Credit Lyonnais San Xxxxxxxxx Xxxxxx 25,000,000
Dresdner Bank AG, New York Branch and Grand 25,000,000
Cayman Branch
The First National Bank of Chicago 25,000,000
Xxxxx Fargo Bank, N.A. 25,000,000
First Union National Bank 25,000,000
Fleet Bank, National Association 25,000,000
Union Bank of California, N.A. 25,000,000
Deutsche Bank AG, New York and/or Cayman Island
Branches 20,000,000
Bank of Montreal 20,000,000
The Bank of New York 20,000,000
The Bank of Nova Scotia 20,000,000
CIBC Inc. 20,000,000
The Industrial Bank of Japan 20,000,000
Lasalle National Bank 20,000,000
Sakura Bank Ltd. 20,000,000
The Sumitomo Bank, Limited 20,000,000
Suntrust Bank, Central Florida, National Association 20,000,000
---------------
Total: $400,000,000.00
===============
EXHIBIT E
[Conformed as Executed]
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT, dated as of August
1, 1997 (this "Agreement"), made by FREMONT GENERAL CORPORATION, a Nevada
corporation (the "Pledgor"), in favor of THE CHASE MANHATTAN BANK, as Collateral
Agent (the "Pledgee") for the benefit of the Secured Creditors (as hereinafter
defined). Except as otherwise defined herein, terms used herein and defined in
the New Credit Agreement shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, the Pledgor, various financial institutions and The
Chase Manhattan Bank, as Agent, have entered into an Amended and Restated Credit
Agreement, dated as of August 24, 1995 (as amended, modified or supplemented to
the date hereof, the "Existing Credit Agreement");
WHEREAS, the Pledgor, various financial institutions from time to
time party thereto (the "Banks"), and The Chase Manhattan Bank (the "Agent"),
have entered into a Credit Agreement, dated as of August 1, 1997 (as amended,
modified or supplemented from time to time, the "New Credit Agreement");
WHEREAS, in connection with the execution of the Existing Credit
Agreement, the Pledgor and The Chase Manhattan Bank, as Collateral Agent and as
Pledgee entered into an Amended and Restated Pledge Agreement, dated as of
August 24, 1995 (as amended, modified or supplemented from time to time, the
"Existing Pledge Agreement");
WHEREAS, proceeds of Loans under the New Credit Agreement are to
be used in part to refinance all indebtedness and commitments under the Existing
Credit Agreement;
WHEREAS, it is a condition precedent to the making of Loans under
the New Credit Agreement that the Pledgor shall have executed and delivered this
Agreement; and
WHEREAS, the Pledgor desires to execute and deliver this
Agreement
to satisfy the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to the
Pledgor, the receipt and sufficiency of which are hereby acknowledged, the
Pledgor hereby makes the following representations and warranties to the Pledgee
for the benefit of the Secured Creditors and hereby covenants and agrees with
the Pledgee for the benefit of the Secured Creditors as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by the
Pledgor for the benefit of the Banks and the Agent (collectively, the "Bank
Creditors") and any Bank (or any affiliate of any Bank) that has entered into or
enters into an Interest Rate Protection Agreement or Other Hedging Agreement
with the Pledgor (any such Bank or affiliate thereof (even if the respective
Bank ceases to be a "Bank" under the New Credit Agreement for any reason), an
"Other Creditor" and, together with the Bank Creditors, collectively, the
"Secured Creditors"; and any such agreement, a "Hedging Agreement") to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of (x) the principal of and
interest on the Notes issued by, and the Loans made to, the Pledgor
under the New Credit Agreement and (y) all other obligations and
indebtedness (including, without limitation, indemnities, Fees and
interest thereon) of the Pledgor, now existing or hereafter incurred
under, arising out of or in connection with the New Credit Agreement and
the other Credit Documents and the due performance and compliance by the
Pledgor with the terms of the Credit Documents (all such principal,
interest, obligations and liabilities under this clause (i) being herein
collectively called the "Credit Agreement Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations and
liabilities owing by the Pledgor to the Other Creditors under, or with
respect to, any Hedging Agreement whether such Hedging Agreement is now
in existence or hereafter arising, and the due performance and
compliance by the Pledgor with the terms of such agreements (all such
obligations and liabilities under this clause (ii) being herein
collectively called the "Other Obligations");
(iii) any and all sums advanced by the Pledgee in order to
preserve the Collateral (as hereinafter defined) or to preserve its
security interest in the Collateral (as hereinafter defined); and
2
(iv) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities of the
Pledgor referred to in clauses (i), (ii) and (iii), after a Specified
Event of Default shall have occurred and be continuing, the reasonable
expenses of retaking, holding, preparing for sale or lease, selling or
otherwise disposing of or realizing on the Collateral (as hereinafter
defined), or of any exercise by the Pledgee of its rights hereunder,
together with reasonable attorneys' fees and court costs;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (iv) of this Section 1 being collectively called the "Obligations". As
used herein, the term "Specified Event of Default" shall mean (i) an Event of
Default or (ii) a default in the payment when due of any Other Obligation.
2. DEFINITION OF STOCK. As used herein, the term "Stock" shall
mean all of the issued and outstanding shares of capital stock at any time owned
by the Pledgor of Fremont Compensation Insurance Group, Inc. ("FCIG"). The
Pledgor represents and warrants that on the date hereof (a) the Stock held by
the Pledgor consists of the number and type of shares as described in Annex A
hereto; (b) the Pledgor is the holder of record and sole beneficial owner of
such Stock; (c) such Stock constitutes that percentage of the issued and
outstanding capital stock of FCIG as is set forth in Annex A hereto; and (d) on
the date hereof, the Pledgor owns no other Stock.
3. PLEDGE OF STOCK, ETC.
3.1 PLEDGE. To secure the Obligations and for the purposes set
forth in Section 1, the Pledgor hereby: (i) grants to the Pledgee a security
interest in all of the Collateral (as hereinafter defined) owned by the Pledgor;
(ii) pledges and deposits as security with the Pledgee all Stock owned by the
Pledgor on the date hereof, and delivers to the Pledgee certificates or
instruments therefor, accompanied by undated stock powers duly executed in blank
by the Pledgor, or such other instruments of transfer as are acceptable to the
Pledgee; (iii) assigns, transfers, hypothecates, mortgages, charges and sets
over to the Pledgee all of the Pledgor's right, title and interest in and to the
Stock (and in and to the certificates evidencing the Stock), to be held by the
Pledgee, upon the terms and conditions set forth in this Agreement and (iv)
confirms, ratifies and affirms all actions heretofore taken in connection with
the Existing Pledge Agreement to accomplish any of the foregoing and further
acknowledges that any Stock heretofore pledged thereunder shall for all purposes
be deemed to be pledged pursuant to this Agreement.
3.2 SUBSEQUENTLY ACQUIRED STOCK. If the Pledgor shall acquire (by
3
purchase, stock dividend or otherwise) any additional Stock at any time or from
time to time after the date hereof, the Pledgor will forthwith pledge and
deposit such Stock (or certificates or instruments representing such Stock) as
security with the Pledgee and deliver to the Pledgee certificates therefor or
instruments thereof, accompanied by undated stock powers duly executed in blank,
or such other instruments of transfer as are acceptable to the Pledgee, and will
promptly thereafter deliver to the Pledgee a certificate executed by a principal
executive officer of the Pledgor describing such Stock and certifying that the
same has been duly pledged with the Pledgee hereunder.
3.3 UNCERTIFICATED STOCK. Notwithstanding anything to the
contrary contained in Sections 3.1 and 3.2, if any Stock (whether or not now
owned or hereafter acquired) are uncertificated securities, the Pledgor shall
promptly notify the Pledgee thereof, and shall promptly take all actions
required to perfect the security interest of the Pledgee under applicable law
(including, in any event, under Sections 8-313 and 8-321 of the New York Uniform
Commercial Code if applicable). The Pledgor further agrees to take such actions
as the Pledgee deems necessary or desirable to effect the foregoing and to
permit the Pledgee to exercise any of its rights and remedies hereunder, and
agrees to provide an opinion of counsel reasonably satisfactory to the Pledgee
with respect to any such pledge of uncertificated Stock promptly upon request of
the Pledgee.
3.4 DEFINITIONS OF PLEDGED STOCK AND COLLATERAL. All Stock at any
time pledged or required to be pledged hereunder is hereinafter called the
"Pledged Stock", which together with all proceeds thereof, including any
securities and moneys received and at the time held by the Pledgee hereunder, is
hereinafter called the "Collateral".
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee
shall have the right to appoint one or more sub-agents for the purpose of
retaining physical possession of the Pledged Stock, which may be held (in the
discretion of the Pledgee) in the name of the Pledgor, endorsed or assigned in
blank or in favor of the Pledgee or any nominee or nominees of the Pledgee or a
sub-agent appointed by the Pledgee.
5. VOTING, ETC., While No Specified Event of Default. Unless and
until a Specified Event of Default shall have occurred and be continuing and the
Pledgee shall have notified the Pledgor that the Pledgor may no longer exercise
the rights referred to below (except that no such notice shall be required in
the case of an Event of Default under Section 8.05 of the New Credit Agreement
with respect to the
4
Pledgor (a "Bankruptcy Event of Default")), the Pledgor shall be entitled to
exercise all voting rights attaching to any and all Pledged Stock, and to give
consents, waivers or ratifications in respect thereof; provided that no vote
shall be cast or any consent, waiver or ratification given or any action taken
which would violate or be inconsistent with any of the terms of the Credit
Documents or any Hedging Agreement, or which would have the effect of impairing
the position or interests of the Pledgee or any Secured Creditor under the
Credit Documents or any Hedging Agreement. All such rights of the Pledgor to
vote and to give consents, waivers and ratifications shall cease in case a
Specified Event of Default shall occur and be continuing and, except in the case
of a Bankruptcy Event of Default with respect to the Pledgor, the Pledgee shall
have notified the Pledgor of such cessation, and Section 7 shall become
applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until a
Specified Event of Default shall have occurred and be continuing, all cash
dividends payable in respect of the Pledged Stock shall be paid to the Pledgor;
provided, that all dividends payable in respect of the Pledged Stock which are
determined by the Pledgee, in its absolute discretion, to represent in whole or
in part a liquidating or other distribution in return of capital shall be paid
to the Pledgee and retained by it as part of the Collateral. The Pledgee shall
also be entitled to receive directly, and to retain as part of the Collateral:
(a) all other or additional stock or other securities or property
(other than cash) paid or distributed by way of dividend or otherwise in
respect of the Pledged Stock;
(b) all other or additional stock or other securities or property
(including cash) paid or distributed in respect of the Pledged Stock by
way of stock-split, spin-off, split-up, reclassification, combination of
shares or similar rearrangement; and
(c) all other or additional stock or other securities or property
(including cash) which may be paid in respect of the Collateral by
reason of any consolidation, merger, exchange of stock, conveyance of
assets, liquidation or similar corporate reorganization.
All dividends, distributions or other payments which are received by the Pledgor
contrary to the provisions of this Section 6 or Section 7 shall be received in
trust for the benefit of the Pledgee, shall be segregated from other property or
funds of the Pledgor and shall be forthwith paid over to the Pledgee as
Collateral in the same form as so received (with any necessary endorsement).
5
7. REMEDIES IN CASE OF A SPECIFIED EVENT OF DEFAULT. In case a
Specified Event of Default shall have occurred and be continuing, the Pledgee
shall be entitled to exercise all of the rights, powers and remedies (whether
vested in it by this Agreement or any other Credit Document or any Hedging
Agreement or by law) for the protection and enforcement of its rights in respect
of the Collateral, including, without limitation, all the rights and remedies of
a secured party upon default under the Uniform Commercial Code of the State of
New York, and the Pledgee shall be entitled, without limitation, to exercise the
following rights, which the Pledgor hereby agrees to be commercially reasonable:
(a) to receive all amounts payable in respect of the Collateral
otherwise payable under Section 6 to the Pledgor;
(b) to transfer all or any part of the Collateral into the
Pledgee's name or the name of its nominee or nominees;
(c) subject to the notice requirements set forth in Section 5, to
vote all or any part of the Pledged Stock (whether or not transferred
into the name of the Pledgee) and give all consents, waivers and
ratifications in respect of the Collateral and otherwise act with
respect thereto as though it were the outright owner thereof (the
Pledgor hereby irrevocably constituting and appointing the Pledgee the
proxy and attorney-in-fact of the Pledgor, with full power of
substitution to do so); and
(d) at any time or from time to time to sell, assign and deliver,
or grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time
or place of sale or adjournment thereof or to redeem or otherwise (all
of which are hereby waived by the Pledgor), for cash, on credit or for
other property, for immediate or future delivery without any assumption
of credit risk, and for such price or prices and on such terms as the
Pledgee in its absolute discretion may determine; provided that at least
10 days' notice of the time and place of any such sale shall be given to
the Pledgor. Each purchaser at any such sale shall hold the property so
sold absolutely free from any claim or right on the part of the Pledgor,
and the Pledgor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the
Collateral, whether before or after sale hereunder, all rights, if any,
of marshalling the Collateral and any other security for the Obligations
or
6
otherwise, and all rights, if any, of stay and/or appraisal which it now
has or may at any time in the future have under rule of law or statute
now existing or hereafter enacted. At any such sale, unless prohibited
by applicable law, the Pledgee may bid on behalf of all Secured
Creditors for and purchase all or any part of the Collateral so sold
free from any such right or equity of redemption. Neither the Pledgee
nor any Secured Creditor shall be liable for failure to collect or
realize upon any or all of the Collateral or for any delay in so doing
nor shall it, except as otherwise required by non-waivable applicable
law, be under any obligation to take any action whatsoever with regard
thereto.
8. REMEDIES, ETC., Cumulative. Each right, power and remedy of
the Pledgee provided for in this Agreement or any other Credit Document or any
Hedging Agreement now or hereafter existing, at law or in equity or by statute
shall be cumulative and concurrent and shall be in addition to every other such
right, power or remedy. The exercise or beginning of the exercise by the Pledgee
of any one or more of the rights, powers or remedies provided for in this
Agreement or any other Credit Document or any Hedging Agreement or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Pledgee or any Secured
Creditor of all such other rights, powers or remedies, and no failure or delay
on the part of the Pledgee or any Secured Creditor to exercise any such right,
power or remedy shall operate as a waiver thereof.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral pursuant to the
terms of this Agreement, together with all other moneys received by the Pledgee
hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing to the Pledgee
of the type described in clauses (iii) and (iv) of Section 1 of this
Agreement;
(ii) second, to the extent moneys remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Primary Obligations (as defined below) shall be paid to the Secured
Creditors as provided in Section 9(e), with each Secured Creditor
receiving an amount equal to the outstanding Primary Obligations then
owing to it or, if the proceeds are insufficient to pay in full all such
Primary Obligations, its Pro Rata Share (as defined below) of the amount
remaining to be distributed;
7
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii), an amount equal to the
outstanding Secondary Obligations (as defined below) shall be paid to
the Secured Creditors as provided in Section 9(e), with each Secured
Creditor receiving an amount equal to its outstanding Secondary
Obligations then owing to it or, if the proceeds are insufficient to pay
in full all such Secondary Obligations, its Pro Rata Share of the amount
remaining to be distributed; and
(iv) fourth, to the extent moneys remain after the application
pursuant to the preceding clauses (i) through (iii), inclusive, and
following the termination of this Agreement pursuant to Section 18(b),
to the Pledgor or to whomever may be lawfully entitled to receive such
surplus.
(b) To the extent that any Class (as defined below) of Secured
Creditors elects, in accordance with Section 20, not to be secured by this
Agreement, then such Class of Secured Creditors shall not share in any
distribution of proceeds pursuant to Section 9(a), and in such event to the
extent such proceeds are then being distributed (i) the Pro Rata Share of each
Secured Creditor of the respective Class with respect to its Obligations of such
Class shall be $0 and (ii) the Pro Rata Shares of the remaining Secured
Creditors, to the extent determined in connection with the distribution of such
proceeds, shall be calculated as if the Class of Obligations described in
preceding clause (i) were not then outstanding.
(c) For purposes of this Agreement, (i) "Pro Rata Share" shall
mean, when calculating a Secured Creditor's portion of any distribution or
amount, the amount (expressed as a percentage) equal to a fraction, the
numerator of which is the then unpaid amount of such Secured Creditor's Primary
Obligations or Secondary Obligations, as the case may be, and the denominator of
which is the then outstanding amount of all Primary Obligations or Secondary
Obligations, as the case may be, (ii) "Primary Obligations" shall mean (x) in
the case of the Credit Agreement Obligations, all principal of, and interest on,
all Loans and all Competitive Bid Loans under the New Credit Agreement, and all
regularly accruing fees owing by the Pledgor under the New Credit Agreement and
(y) in the case of the Other Obligations, all net amounts due under Hedging
Agreements (other than indemnities, fees (including, without limitation,
attorneys' fees) and similar obligations and liabilities) and (iii) "Secondary
Obligations" shall mean all Obligations other than Primary Obligations.
(d) When payments to the Secured Creditors are based upon their
8
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (for purposes of making determinations under this
Section 9 only) (i) first, to their Primary Obligations and (ii) second, to
their Secondary Obligations. If any payment to any Secured Creditor of its Pro
Rata Share of any distribution would result in overpayment to such Secured
Creditor, such excess amount shall instead be distributed in respect of the
unpaid Primary Obligations or Secondary Obligations, as the case may be, of the
other Secured Creditors, with each Secured Creditor whose Primary Obligations or
Secondary Obligations, as the case may be, have not been paid in full to receive
an amount equal to such excess amount multiplied by a fraction the numerator of
which is the unpaid Primary Obligations or Secondary Obligations, as the case
may be, of such Secured Creditor and the denominator of which is the unpaid
Primary Obligations or Secondary Obligations, as the case may be, of all Secured
Creditors entitled to such distributions.
(e) All payments required to be made hereunder shall be made (i)
if to the Bank Creditors, to the Agent under the New Credit Agreement for the
account of the Bank Creditors and (ii) if to the Other Creditors, in accordance
with their respective written instruction delivered from time to time to the
Pledgee.
(f) For purposes of applying payments received in accordance with
this Section 9, the Pledgee shall be entitled to rely, (i) in the case of the
Bank Creditors, upon the Agent under the New Credit Agreement for a
determination as to the outstanding Primary Obligations and Secondary
Obligations owed to the Bank Creditors and (ii) in the case of any other Secured
Creditor, such Secured Creditor for a determination (which the Agent and the
Secured Creditors shall agree to provide upon request of the Pledgee) of the
outstanding Primary Obligations and Secondary Obligations owed to the respective
Secured Creditors. Unless it has actual knowledge (including by way of written
notice from a Bank Creditor or any other Secured Creditor) to the contrary, the
Pledgee, in acting hereunder, shall be entitled to assume that no Secondary
Obligations are outstanding. Unless it has actual knowledge (including by way of
written notice from an Other Creditor) to the contrary, the Pledgee, in acting
hereunder, shall be entitled to assume that no Hedging Agreements are in
existence.
(g) It is understood and agreed that the Pledgor shall remain
liable to the extent of any deficiency between the amount of the proceeds of the
Collateral hereunder and the aggregate amount of the sums referred to in clauses
(i) through (iii), inclusive, of Section 9(a) and the aggregate outstanding
amount of the Obligations.
10.PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
9
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11.INDEMNITY. The Pledgor agrees (a) to indemnify and hold harmless
the Pledgee and the Secured Creditors from and against any and all claims,
demands, losses, judgments and liabilities (including liabilities for penalties)
of whatsoever kind or nature, and (b) to reimburse the Pledgee and the Secured
Creditors for all costs and expenses, including reasonable attorneys' fees,
growing out of or resulting from this Agreement or the exercise by the Pledgee
of any right or remedy granted to it hereunder except, with respect to clauses
(a) and (b) above, for those arising from the Pledgee's gross negligence or
willful misconduct. In no event shall the Pledgee be liable, in the absence of
gross negligence or willful misconduct on its part, for any matter or thing in
connection with this Agreement other than to account for moneys actually
received by it in accordance with the terms hereof. If and to the extent that
the obligations of the Pledgor under this Section 11 are unenforceable for any
reason, the Pledgor hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations which is permissible under
applicable law.
12.FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) The Pledgor agrees
that it will join with the Pledgee in executing and, at the Pledgor's own
expense, file and refile under the Uniform Commercial Code such financing
statements, continuation statements and other documents in such offices as the
Pledgee may deem necessary or appropriate and wherever required or permitted by
law in order to perfect and preserve the Pledgee's security interest in the
Collateral and hereby authorizes the Pledgee to file financing statements and
amendments thereto relative to all or any part of the Collateral without the
signature of the Pledgor where permitted by law, and agrees to do such further
acts and things and to execute and deliver to the Pledgee such additional
conveyances, assignments, agreements and instruments as the Pledgee may
reasonably require or deem advisable to carry into effect the purposes of this
Agreement or to further assure and confirm unto the Pledgee its rights, powers
and remedies hereunder.
(b) The Pledgor hereby appoints the Pledgee the Pledgor's
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor or otherwise, from time to time after notice to the
Pledgee following the occurrence and during the continuance of a Specified Event
of Default, in the
10
Pledgee's discretion to take any action and to execute any instrument which the
Pledgee may reasonably deem necessary or advisable to accomplish the purposes of
this Agreement.
13.THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with
this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed that the obligations of the
Pledgee as holder of the Collateral and interests therein and with respect to
the disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement. The Pledgee shall act hereunder on the
terms and conditions set forth herein and in Section 10 of the New Credit
Agreement.
14.TRANSFER BY THE PLEDGOR. The Pledgor will not sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein.
15.REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGOR. The
Pledgor represents, warrants and covenants that (a) it is the legal, record and
beneficial owner of, and has good and marketable title to, all Stock pledged by
it hereunder, subject to no pledge, lien, mortgage, hypothecation, security
interest, charge, option or other encumbrance whatsoever, except the liens and
security interests created by this Agreement and Non-Consensual Permitted Liens;
(b) it has full power, authority and legal right to pledge all the Stock pledged
by it pursuant to this Agreement; and (c) all the shares of the Stock have been
duly and validly issued and are fully paid and nonassessable. The Pledgor
covenants and agrees that it will defend the Pledgee's right, title and security
interest in and to the Stock and the proceeds thereof against the claims and
demands of all persons whomsoever; and the Pledgor covenants and agrees that it
will have like title to and right to pledge any other property at any time
hereafter pledged to the Pledgee as Collateral hereunder and will likewise
defend the right thereto and security interest therein of the Pledgee and the
Secured Creditors.
16.PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of the
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (a) any renewal,
extension, amendment or modification of, or addition or supplement to or
deletion from any of the Credit Documents or any Hedging Agreement or any other
instrument or agreement referred to therein, or any assignment or transfer of
any thereof; (b) any waiver, consent, extension, indulgence
11
or other action or inaction under or in respect of any such agreement or
instrument or this Agreement; (c) any furnishing of any additional security to
the Pledgee or its assignee or any acceptance thereof or any release of any
security by the Pledgee or its assignee; (d) any limitation on any party's
liability or obligations under any such instrument or agreement or any
invalidity or unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof; or (e) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to the Pledgor or any Subsidiary of the Pledgor, or any
action taken with respect to this Agreement by any trustee or receiver, or by
any court, in any such proceeding, whether or not the Pledgor shall have notice
or knowledge of any of the foregoing.
17.REGISTRATION, ETC. (a) If a Specified Event of Default shall have
occurred and be continuing and the Pledgor shall have received from the Pledgee
a written request or requests that the Pledgor cause any registration,
qualification or compliance under any Federal or state securities law or laws to
be effected with respect to all or any part of the Stock, the Pledgor as soon as
practicable and at its expense will use its best efforts to cause such
registration to be effected (and be kept effective) and will use its best
efforts to cause such qualification and compliance to be effected (and be kept
effective) as may be so requested and as would permit or facilitate the sale and
distribution of such Stock, including, without limitation, registration under
the Securities Act of 1933, as then in effect (or any similar statute then in
effect), appropriate qualifications under applicable blue sky or other state
securities laws and appropriate compliance with any other governmental
requirements; provided that the Pledgee shall furnish to the Pledgor such
information regarding the Pledgee as the Pledgor may request in writing and as
shall be required in connection with any such registration, qualification or
compliance. The Pledgor will cause the Pledgee to be kept reasonably advised in
writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, will furnish to the Pledgee such
number of prospectuses, offering circulars and other documents incident thereto
as the Pledgee from time to time may reasonably request, and will use its best
efforts to cause the issuer of the Stock to indemnify the Pledgee and all others
participating in the distribution of such Stock against all losses, liabilities,
claims or damages caused by any untrue statement (or alleged untrue statement)
of a material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same may have been caused by an
untrue statement or omission based upon information furnished in writing to the
Pledgor by the Pledgee expressly for use therein.
12
(b) If at any time when the Pledgee shall determine to exercise
its right to sell all or any part of the Pledged Stock pursuant to Section 7,
such Pledged Stock or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the Securities Act of 1933, as then
in effect, the Pledgee may, in its sole and absolute discretion, sell such
Pledged Stock or part thereof by private sale in such manner and under such
circumstances as Pledgee may deem necessary or advisable in order that such sale
may legally be effected without such registration; provided that at least 10
days' notice of the time and place of any such sale shall be given to the
Pledgor. Without limiting the generality of the foregoing, in any such event the
Pledgee, in its sole and absolute discretion (i) may proceed to make such
private sale notwithstanding that a registration statement for the purpose of
registering such Pledged Stock or part thereof shall have been filed under such
Securities Act, (ii) may approach and negotiate with a single possible purchaser
to effect such sale and (iii) may restrict such sale to a purchaser who will
represent and agree that such purchaser is purchasing for its own account, for
investment, and not with a view to the distribution or sale of such Pledged
Stock or part thereof. In the event of any such sale, the Pledgee shall incur no
responsibility or liability for selling all or any part of the Pledged Stock at
a price which the Pledgee, in its sole and absolute discretion, may in good
xxxxx xxxx reasonable under the circumstances, notwithstanding the possibility
that a substantially higher price might be realized if the sale were deferred
until the registration as aforesaid.
18.TERMINATION; RELEASE. (a) The Pledgee shall, at the request and
expense of the Pledgor, release (without recourse and without any representation
or warranty) any or all of the Collateral and deliver an appropriate instrument
acknowledging such release, provided that such release has been approved in
writing by the Required Secured Creditors. As used herein, the term (i)
"Required Secured Creditors" shall mean the requisite percentage of Secured
Creditors which are needed to take actions with respect to a given Class of
Obligations, i.e., whether the Required Banks, all Banks and/or the Required
Other Creditors and (ii) "Required Other Creditors" shall mean the holders of
51% of all Obligations outstanding from time to time under Hedging Agreements,
determined in such reasonable fashion as is acceptable to the Pledgee.
(b) After the Termination Date (as defined below), this Agreement
shall terminate (provided that all indemnities set forth herein including,
without limitation, in Section 11 hereof shall survive any such termination) and
the Pledgee, at the request and expense of the Pledgor, will execute and deliver
to the Pledgor a proper instrument or instruments acknowledging the satisfaction
and termination of
13
this Agreement as provided above, and will duly assign, transfer and deliver to
the Pledgor (without recourse and without any representation or warranty) such
of the Collateral as may be in the possession of the Pledgee and as has not
theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the Pledgee hereunder.
As used in this Agreement, "Termination Date" shall mean the date upon which
Total Commitment and all Hedging Agreements shall have been terminated and the
Obligations have been paid in full.
(c) At any time that the Pledgor desires that Collateral be
released as provided in the foregoing Section 18(a) or (b), it shall deliver to
the Pledgee a certificate signed by its chief financial officer stating that the
release of the respective Collateral is permitted pursuant to Section 18(a) or
(b), as the case may be. Upon any release of Collateral pursuant to Section
18(a) or (b), none of the Secured Creditors shall have any continuing right or
interest in such Collateral.
19.NOTICES, ETC. All notices and other communications hereunder
shall be in writing and shall be delivered or mailed by first class mail,
postage prepaid, addressed:
(a) if to the Pledgor, at:
Fremont General Corporation
0000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxx, Esq.
(b) if to the Pledgee, at:
The Chase Manhattan Bank
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx
(c) if to any Bank Creditor, at such address as such Bank
Creditor shall have specified in the New Credit Agreement; and
(d) if to any Other Creditor, at such address as such Other
Creditor shall have specified in writing to the Pledgor and Pledgee;
14
or at such address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20.WAIVER, AMENDMENT. (a) Except as provided in clause (b) below,
none of the terms and conditions of this Agreement may be changed, waived,
modified or varied in any manner whatsoever unless in writing duly signed by the
Pledgor and the Pledgee with the consent of the Required Secured Creditors;
provided, however, that any change, waiver, modification or variance affecting
the rights and benefits of a single Class (as defined below) of Secured
Creditors (and not all Secured Creditors in a like or similar manner) shall
require the written consent of the Required Secured Creditors of such affected
Class. For the purpose of this Agreement, the term "Class" shall mean each class
of Secured Creditors, i.e., whether (i) the Bank Creditors as holders of the
Credit Agreement Obligations or (ii) the Other Creditors as holders of the Other
Obligations.
(b) Notwithstanding anything to the contrary contained in this
Agreement, any Class of Secured Creditors (with the written consent of the
Required Secured Creditors of such Class, or all Secured Creditors of such Class
to the extent required by the Credit Documents or Hedging Agreements, as the
case may be, of such Class), may elect to release their security interest (but
only to the extent securing Obligations of the respective Class) under this
Agreement, in which case the respective Obligations of such Class of Secured
Creditors shall no longer be secured by this Agreement. In the event of an
election made pursuant to the immediately preceding sentence, then upon the
further request of the respective Class of Secured Creditors, the Pledgor and
the Pledgee hereby agree to take such action as is reasonably necessary
(including a modification of this Agreement) to effectuate the removal of the
respective Class of Secured Creditors as secured parties under this Agreement.
21.MISCELLANEOUS. This Agreement shall create a continuing security
interest in the Collateral and shall (a) remain in full force and effect,
subject to release and/or termination as set forth in Section 18, (b) be binding
upon the Pledgor, its successors and assigns; provided, however, that the
Pledgor shall not assign any of its rights or obligations hereunder without the
prior written consent of the Pledgee (with the prior written consent of the
Required Secured Creditors) and (c) inure, together with the rights and remedies
of the Pledgee hereunder, to the benefit of the Pledgee, the Secured Creditors
and their respective successors, transferees and assigns. THIS AGREEMENT SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK. The headings of
15
the several sections and subsections in this Agreement are for purposes of
reference only and shall not limit or define the meaning hereof. This Agreement
may be executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one instrument. In the
event that any provision of this Agreement shall prove to be invalid or
unenforceable, such provision shall be deemed to be severable from the other
provisions of this Agreement which shall remain binding on all parties hereto.
22.WAIVER OF JURY TRIAL. THE PLEDGOR HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
23. ACTIONS REQUIRING APPROVAL. (a) Notwithstanding anything to the
contrary contained in this Agreement or any of the documents executed pursuant
hereto, the Pledgee will not take any action pursuant to this Agreement, or any
such documents, which would constitute or result in any transfer of control of
FCIG (including any direct or indirect voting of the Pledged Stock) without
first obtaining the approval (or an exemption from the requirement to obtain
such approval) of the California Department of Insurance pursuant to Section
1215.2 of the California Insurance Code.
(b) If a Specified Event of Default shall have occurred
and be continuing, the Pledgor shall take any action which the Pledgee may
request in the exercise of its rights and remedies under this Agreement in order
to transfer or assign the Collateral to the Pledgee or to such one or more third
parties as the Pledgee may designate, or to a combination of the foregoing. To
enforce the provisions of this Section 23, the Pledgee is empowered to seek from
any governmental authority, to the extent required, consent to or approval of
any involuntary transfer of control of any entity whose Collateral is subject to
this Agreement for the purpose of seeking a bona fide purchaser to whom control
will ultimately be transferred. The Pledgor agrees to cooperate with any such
purchaser and with the Pledgee in the preparation, execution and filing of any
forms and providing any information that may be necessary or helpful in
obtaining any applicable governmental authority's consent to the assignment to
such purchaser of the Collateral. The Pledgor hereby agrees to consent to any
such involuntary transfer of control upon the request of the Pledgee after and
during the continuation of a Specified Event of Default and, without limiting
any rights of the Pledgee under this Agreement, to authorize the Pledgee to
nominate a trustee or receiver to assume control of the Collateral, subject only
to required judicial or other consent required by governmental authorities, in
order to effectuate the transactions
16
contemplated in this Section 23. Such trustee or receiver shall have all the
rights and powers as provided to it by law or court order, or to the Pledgee
under this Agreement. The Pledgor shall cooperate fully in obtaining the
approval or consent of each governmental authority required to effectuate the
foregoing.
(c) The Pledgor shall use its best efforts to assist in
obtaining consent or approval of any governmental authority, if required, for
any action or transactions contemplated by this Agreement, including, without
limitation, the preparation, execution and filing of the transferor's or
assignor's portion of any application or applications for consent to the
transfer of control or assignment necessary or appropriate under applicable
rules and regulations for approval of the transfer or assignment of any portion
of the Collateral.
* * * *
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
FREMONT GENERAL CORPORATION,
as Pledgor
By /s/ XXXXX X. XXXXXX
-------------------
Xxxxx X. Xxxxxx
Title: Executive Vice President,
Treasuer and Chief Financial Officer
THE CHASE MANHATTAN BANK,
as Pledgee
By /s/ XXXXXXX XXXXXXXXX
----------------------
Title: Vice President
ANNEX A
to
PLEDGE AGREEMENT
LIST OF STOCK
Percentage
of Outstanding
Name of Issuing Type Number Shares of
Corporation of Shares of Shares Capital Stock
----------------------- --------------- --------- --------------
Fremont Compensation
Insurance Group, Inc. 100%
